Coinbase (NASDAQ: COIN) is a buy
Analyst John Todaro initiated coverage of the stock on Tuesday with a buy rating, stating in a client note that Coinbase had the potential to expand into other lucrative areas of the crypto space.
“We see COIN as a market-leading crypto asset exchange with significant future opportunities beyond exchange services, such as staking, custody, yield bearing products, and more,” according to the note.
Coinbase went public in April, timed to coincide with the recent peak in bitcoin prices. On the first day of trading, shares soared above $400, only to plummet dramatically over the next month. Throughout the summer, the stock has largely traded in the mid-$200s.
Needham set a price target of $420 per share for Coinbase, which is 64% higher than the stock’s closing price on Monday. The stock’s all-time intraday high, set on its first day of trading, is $429.54.
According to Needham, these various services, as well as the large number of crypto assets available on Coinbase’s platform, should allow the company to protect its fees, unlike brokerage firms in the old-guard financial space.
“In terms of fees, we believe that investor concerns are misplaced, as the non-commoditized nature of crypto exchanges distinguishes them from traditional brokerage firms, where fee compression has occurred in recent years,” according to the note.
Stocks to buy according to Morgan Stanley
In a research note issued on August 15, the bank warned of a “muted” economic recovery in Asia-Pacific and emerging markets, as well as a “cautious” stance toward China given its ongoing regulatory crackdown.
“Covid-19 outbreaks and lock-downs are inversely related to domestic-facing stock performance.” Asia / EM [emerging markets] is generally lagging behind DM [developed markets] on vaccinations, and Asia will not break out of this cycle until late in Q4 at the earliest,” analysts led by Jonathan F Garner stated.
“We believe commodity prices have reached their cycle peaks, though valuations in Energy & Materials are reasonable,” the analysts said, adding that Morgan Stanley is overweight in regions such as Australia, India, Singapore, and Brazil.
With these considerations in mind, the bank compiled lists of “high conviction ideas to own” for Asia-Pacific (excluding Japan) and emerging markets, all of which it favors.
Its tech picks include the Indian IT firm Tata Consultancy Services, the Argentine software firm Globant, and the South Korean conglomerate Samsung.
Morgan Stanley also chose AIA Group, DBS Group in Singapore, and Macquarie Group and Westpac in Australia.
In terms of materials, the bank chose POSCO, a Korean steel company, SCG, a Thai packaging group, Cemex, a Mexican construction supplier, Northam Platinum, a South African miner, and Vale, a Brazilian iron ore producer.
Oil and gas company PetroChina and Chinese battery company Shanghai Putailai New Energy Tech are among the energy stocks on its list.
It chose Yahoo Japan owner Z Holdings, travel agency HIS, gaming firm Nintendo, and human resources firm Recruit Holdings on a separate list of “high conviction” ideas for Japan. It chose Sony in electronics, Nidec in motors, and HOYA and Olympus in opticals.
“Japan is rapidly closing the vaccination gap with DMs [developed markets] and is ahead of EM [emerging markets] on earnings estimate revisions and trading on an unusually low valuation premium,” Morgan Stanley analysts stated.
Green winning stocks
Hydrogen can be used to store and transport energy from other sources. It’s also a clean fuel, producing only water when burned in a fuel cell.
In a recent report, analysts at OCBC Investment Research wrote that hydrogen is “especially promising” as a means of reducing carbon emissions.
OCBC Bank of Singapore identified banks that could benefit from the hydrogen wave in terms of investments or earnings. China’s Sinopec and France’s Alstom are among them, as are Air Products and Chemicals and Kinder Morgan in the United States.
OCBC’s price target for those companies is as follows:
Sinopec: 4.94 Hong Kong dollars (approximately $0.63).
45 euros ($52.81) for Alstom
$316 for Air Products and Chemicals
$21 for Kinder Morgan
General Electric is also rated “buy” by the firm, with a price target of $131. According to OCBC, GE’s gas turbines can run on hydrogen and have a wide range of industrial applications.
OCBC Investment Research assigns a “buy” rating to stocks that have total expected returns (minus dividends) of more than 10% based on the current price. The ratings are for medium-term investments with a 12-month investment horizon.
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Enterprise Products Partners, which already produces hydrogen for industrial use, has a “buy” rating and a $25.50 price target from OCBC. The bank believes there are opportunities for the company to participate in hydrogen marketing and to contribute to local hydrogen networks.
Hydrogen in green and blue
The hydrogen fuel process is still frequently reliant on the combustion of natural gas, a fossil fuel.
As a result, according to OCBC, investment is being directed toward two areas with the goal of reducing carbon dependency: green hydrogen, which is generated from renewable sources, and blue hydrogen, which is generated from fossil fuels but is paired with carbon-capture efforts elsewhere.
This phenomenon, according to OCBC, could benefit CF Industries Holdings. The company is a nitrogen producer that is investing in a green ammonia plant while also increasing its capacity for blue ammonia. According to S&P Global Ratings, ammonia producers typically use natural gas to generate the hydrogen required in a highly carbon dioxide intensive process.
According to OCBC analysts, CF Industries may be able to capture a price premium as it sells a greater proportion of blue ammonia over time. The stock is rated “buy” by the firm, with a price target of $57.
There will be difficulties ahead.
While acknowledging that governments around the world are developing “ambitious plans” for hydrogen development, OCBC cautioned that the recent surge in investor interest may be “more speculative than considered,” given the sector’s infancy. A recent study, for example, suggested that blue hydrogen may be worse for the environment than coal.
Green hydrogen costs, according to OCBC analysts, would have to drop significantly in order to become cost-competitive. Meanwhile, government assistance in the form of carbon taxation could aid in closing the cost gap with fossil fuels.
The analysts also stated that the United States would need to build and rely on dedicated hydrogen infrastructure because the current transportation network is constructed with materials that are not suitable for the substance. OCBC also stated that storage is still a problem for the sector because efficient options are “not widely available” across the country.
Lee’s remarks come after the major stock indices closed lower last week on fears that the Fed would reduce its Covid stimulus. Minutes from the Fed’s July meeting, released last week, revealed that the central bank is considering reducing its monthly asset purchases this year.
“Within the window of the taper announcement, and even ahead of the first actions, I would expect investors to be extremely nervous. They don’t like uncertainty, and removing this huge support will make investors nervous,” Lee said.
“I don’t think it will make a difference in terms of where markets are in 12 months, and for those who are focused on long-term investing, these periods of weakness are really buying opportunities,” Lee said.
While investors consider whether inflation will be transitory or persistent, Lee says that while inflation is a new variable for markets, history shows that rising prices may not be as damaging to stocks as some market participants may believe.
“I don’t think markets need to be as concerned about inflation as we think,” Lee said.
The Fundstrat managing partner also believes that for the time being, most investors see Covid as here to stay, and he does not see future good news about pandemic recovery being baked into the markets at current levels.