If you think marijuana stocks have been on a tear over the trailing year, then you haven't seen anything yet. Even though the roughly one dozen largest marijuana stocks have averaged a greater than 100% return over the trailing 12 months, it's cryptocurrencies such as bitcoin and ethereum that have left weed stocks in the dust.
Bitcoin is perhaps the best-known digital currency, and it's also the largest by market cap. After ending 2016 at $966.60 per coin, bitcoin has seen its value soar to $4,000 per coin as of Aug. 21, 2017. That's better than a 300% return in less than eight months. In fact, it was even greater the previous week when bitcoin hit an all-time intraday high of $4,489.10 per coin. Since its lows in 2015, bitcoin has rallied by more than 1,600%, and in the process the total market cap of bitcoin has soared. With 16,519,100 coins having been mined to date, bitcoin's market cap stands at more than $66 billion. That makes bitcoin larger than six very well-known companies.
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Nothing says auto manufacturing quite like Detroit's finest, but kingpin General Motors (NYSE: GM), with a $51 billion market cap, now takes a back seat in market cap to bitcoin. Mind you, bitcoin isn't backed by any governments, while at the other end of the spectrum, General Motors has generated $9.8 billion in profits over the trailing-12-month period as it looks to retain domestic market share and claim additional share in China's burgeoning auto market with its quick-growing Cadillac brand. Yes, it's comparing an apple and an orange in a sense, but the stark contrast is eye-opening.
Do-it-yourself home-improvement giant Lowe's (NYSE: LOW), with its nearly $63 billion market cap, is another mammoth business that now looks up to bitcoin. Lowe's is a cyclical company, like most retailers, but it's been able to hedge its business toward the retail consumer and remodels during periods of slower economic growth and recessions. This ability to switch between commercial and residential sales channels, and its 54 consecutive years of increasing its dividend (only around a dozen publicly traded companies have a longer active streak), make Lowe's a popular investment.
Motoring back to the auto industry, hot electric-vehicle (EV) manufacturer Tesla (NASDAQ: TSLA), which has itself seen its share price increase by more than 1,000% over the trailing-five-year period, also trails bitcoin with a market cap of $56 billion. Admittedly, Tesla's market cap already contains a lot of premium, much like bitcoin. Expectations are high that Tesla's new Gigafactory and continued investment in EVs will allow it to increase production of its newly introduced, and considerably more affordable, Model 3 (relative to the Model S and Model X list prices) from 1,500 units in September to 20,000 a month by December.
Perhaps known best as the "Un-carrier" for its no-contract wireless plans, T-Mobile (NASDAQ: TMUS) and its $52 billion market cap also fall well short of bitcoin. Of course, this hasn't stopped T-Mobile from making waves as it continues its customer-friendly transformation. It's added more than 1 million subscribers in each of the past 17 quarters (that more than four years), and it recently posted a record-low churn rate of 1.10% in the second quarter. In other words, more people are making the switch to T-Mobile, and those that have chosen T-Mobile as their wireless service provider are sticking around. Yet T-Mobile's nearly 70 million customers are still not enough to eclipse bitcoin.
Logistics giant FedEx (NYSE: FDX) and its $55 billion market cap aren't enough to surpass bitcoin, either. Mind you, this is a company that generated more than $60 billion in sales in fiscal 2017 and $3.33 billion in adjusted net income over that same timeframe, and that ships more than 13 million packages per business day. Expecting this latter figure to increase in the years that lie ahead, FedEx has been a big investor in automation, including autonomous delivery trucks and the possible use of delivery robots. It's also been investing in optimized software solutions that guide drivers to the most efficient delivery routes so as to reduce fuel consumption and save money.
Last, but not least, tech-based entertainment giant Sony (NYSE: SNE), with its $48 billion market cap, takes a clear back seat to bitcoin. Sony develops and manufactures everything from televisions and mobile phones to movies and video gaming systems that your teens probably have difficulty prying themselves from. Chances are that Sony's financial results for this fiscal year could be better than expected, with Spider-Man: Homecoming netting an estimated $725 million worldwide through Aug. 20, and a release of the hit still upcoming in China this September. These figures weren't factored into its most recent quarterly results.
The big question many investors are asking is: Can bitcoin continue its nearly exponential run higher and maintain its lofty market cap? While there are a number of catalysts behind the rally, including a weaker U.S. dollar and the highly coveted blockchain technology underlying bitcoin that securely digitally logs transactions, there are also no true fundamentals for investors to pore over to get a feel for what bitcoin is really worth. Worse yet, with no government backing, bitcoin could see a possible collapse in value that's just as rapid as its ascent.
While bitcoin has been one heck of a story in 2017, I would suggest investors avoid digital currencies for the time being.
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Sean Williams has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool recommends FedEx, Lowe's, and T-Mobile US. The Motley Fool has a disclosure policy.
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