Financial markets and stocks are in disarray. While companies like banks are down due to interest rate fears, a select number of companies related to financial exchanges are also being hard hit – even as trading volume has been exploding.
These companies tend to be consistently and largely profitable. So any short-term decline due to market conditions will tend to unwind over time, leading to big returns for patient investors who buy during market fears.
That’s true of both traditional assets and newer assets like cryptocurrencies.
Now, with cryptocurrency markets in a massive decline, broker
Coinbase Global (COIN) is expanding its offerings into derivatives on Bitcoin.
That’s a huge opportunity for the company to grow revenues, even as the space is still out of favor with the markets. It may not add to revenues soon, but with shares already trading at 5 times earnings, the company stands to get even more profitable.
Action to take: Shares are down 75 percent in the past year. They may decline further in line with crypto markets. But the company is cheap, and has a massive 34 percent profit margin, which could expand with derivative offerings in crypto. The stock is a ways off from paying a dividend, but with its consistent profitability, it could in time.
For traders, the January $100 calls are far out-of-the-money. But they’re price at about $8.00, indicating that the market sees a strong possibility for a rebound in the months ahead. Traders should look to buy options on a major down day for shares, and look for mid-to-high double-digit profits in the coming weeks.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.
