Even though the stock market ended 2021 with one of its strongest performances in some time, it was cryptocurrencies that once again claimed supremacy. When the dust settled, the aggregate value of digital currencies nearly tripled to $2.2 trillion in 12 months.
While Bitcoin and Ethereum played key roles in lifting the total value of cryptocurrencies — the “Big Two” account for 60% of the crypto market cap — it was meme coin Shiba Inu (CRYPTO:SHIB) that had the undivided attention of crypto investors in 2021.
The rise (and coming fall) of Shiba Inu
At midnight on Jan. 1, 2021, investors had the opportunity to purchase SHIB tokens for a microscopic $0.000000000073. By years’ end, these same tokens were going for about $0.0000338. That’s still a puny per-token price; but in eliminating six zeroes after its decimal point, Shiba Inu delivered a historic gain of about 46,000,000%. In context, an investment of a little over $2 would have made investors millionaires in a year.
Shiba Inu enjoyed numerous catalysts last year, including new crypto exchange listings, the launch of decentralized exchange ShibaSwap, the landing of a few key merchants, and the fear of missing out (FOMO). FOMO has been particularly strong given that social media-based hype has arguably been SHIB’s leading driver.
However, Shiba Inu is almost certain to face a challenging 2022. Despite setting records last year, it’s a payment coin that lacks competitive advantages and differentiation. That’s a big problem when there are more than 16,000 listed cryptocurrencies, according to CoinMarketCap.com, and new blockchain projects are debuting each week.
Shiba Inu also has minimal real-world utility. Despite a mammoth market cap of more than $18 billion, only around 550 merchants, excluding crypto exchanges, accept SHIB as a form of payment, according to online business directory Cryptwerk.
But the icing on the cake might be historic precedence. Looking back at how other payment coins have fared after life-altering gains in the short-term suggests Shiba Inu could lose 99% of its value over a two-year stretch. SHIB has already lost more than 60% of its value in two months, and it probably has further to fall in 2022.
Ditch SHIB for these unstoppable stocks in 2022
Instead of throwing your money at a hyped asset with nothing to back up its bloated valuation, I’d suggest buying proven, moneymaking stocks. The following four unstoppable stocks could all run circles around Shiba Inu in 2022.
You might not think of conglomerate Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) as much of a growth story, but this Warren Buffett-led company has been absolutely unstoppable for decades. Since the Oracle of Omaha took the helm in 1965, shares have averaged a better-than-20% annual gain. In total, Buffett has overseen the creation of more than $600 billion in shareholder value.
It would take a book, or one very long article, to describe every reason behind Buffett’s success. But we can boil down Berkshire Hathaway’s outperformance to two key factors.
First, Warren Buffett and his investment team have packed the company’s investment portfolio and owned subsidiaries with cyclical businesses, such as financials, information technology, consumer staples, and energy. Even though recessions are an inevitable part of the economic cycle, Buffett and his investing team recognize that periods of expansion vastly outweigh pullbacks. This is to say that recessions are measured in months, whereas periods of expansion often last many years. By trusting his investment thesis over long periods of time, Buffett is playing a numbers game that heavily favors his success, and that of his investors.
The other factor working in Berkshire Hathaway’s favor is Warren Buffett’s penchant for dividend stocks. This year, Berkshire Hathaway should collect over $5 billion in dividend income. Since dividend stocks are almost always profitable and time-tested, they’re the perfect place for the Oracle of Omaha to park his company’s money over the long run.
Most biotech stocks are perpetual money-losers in search of their first hit drug. Vertex, on the other hand, has developed multiple blockbuster therapies that have achieved at least $1 billion in annual sales. It’s specifically made its mark in helping patients battle cystic fibrosis (CF), a genetic disease characterized by thick mucus production that can obstruct the lungs and pancreas.
Vertex has successfully developed four generations of mutation-specific CF therapies designed to improve lung function. The latest combination therapy, known as Trikafta, was approved five months ahead of its scheduled review date with the U.S. Food and Drug Administration. In the September-ended quarter, Trikafta brought in $1.56 billion, placing it on track for an annual revenue run rate north of $6.2 billion.
Vertex has an exciting internal drug-development program, too. It’s partnered with CRISPR Therapeutics for the development of CTX001, a treatment for sickle cell disease and transfusion-dependent beta thalassemia, and is working solo on additional treatments for type 1 diabetes and APOL1-mediated kidney diseases.
With almost $7 billion in cash on hand and sustained double-digit growth, Vertex should outpace SHIB.
The beauty of cybersecurity is that it’s evolved into a basic need service. It doesn’t matter how well or poorly the U.S. economy is performing, or how big a business is. Hackers and robots don’t take days off. With more businesses than ever shifting their data into the cloud in the wake of the pandemic, best-of-breed cybersecurity company CrowdStrike has really stood out as a winner.
What makes CrowdStrike tick is the company’s cloud-native Falcon platform. Falcon leans on artificial intelligence to grow smarter at recognizing and responding to threats over time, and according to the company it evaluates about 1 trillion events on a daily basis. Although CrowdStrike isn’t the cheapest cybersecurity solution, the level of protection it provides actually makes it one of the most cost-efficient over the long run.
If you want evidence of Falcon’s efficacy, just pull up the company’s operating performance. In less than five years, its subscriber count has grown from 450 to almost 14,700, with a customer retention rate consistently around 98%. What’s more, 68% of its clients have signed up for four or more cloud-module subscriptions, which is up from less than 10% five years ago.
Long story short, CrowdStrike has already hit its long-term adjusted gross margin target of around 80%, yet it’s still in the early innings of its growth.
A fourth and final unstoppable stock with all the catalysts necessary to run circles around Shiba Inu in 2022 is Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), the parent company of search engine Google and streaming platform YouTube.
Like Berkshire Hathaway, Alphabet is a big fan of the economic cycle. That’s because search engine Google is dependent on advertising. During recessions, advertising dollars tend to dry up. Thankfully, periods of expansion last considerably longer than recessions.
It also doesn’t hurt that Google is a veritable search monopoly. According to data from GlobalStats, Google had a nearly 92% share of global search in December 2021, and has consistently gobbled up between a 91% and 93% share of search dating back to 2019. This sort of dominance makes it to the go-to for advertisers, and gives Alphabet incredible ad pricing power.
Alphabet has other high-growth ventures besides Google, too. YouTube has become one of the three most-visited social platforms on the planet, while cloud infrastructure service segment Google Cloud has consistently grown by 45% to 50% on a year-over-year basis. These faster-growing segments, especially Cloud, should provide a sizable lift to Alphabet’s operating cash flow in the years to come.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.