Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
Bitcoin may be heralded as a store of value, a digital gold if you will. However, in the last year, it has become a wealth generator. The vast majority of stocks cannot boast to do the same, but some can. These stocks actually outperformed Bitcoin in 2021.
Although Bitcoin’s price more than tripled during the year, going from $7k in January to $23k in December, certain stocks have managed to exceed this level of rare success. Driven by the forces of digitization and sustainability, these stocks thrived amid the economy thrashing COVID-19 pandemic.
Stocks have become wildly popular thanks to their increased accessibility. Through the top online stock brokers, investors can access the stock market with a mere internet connection.
Tesla often elicits a divided perspective. Some view it as a bloated tech stock which would have a much lower valuation if viewed as a car company stock. Others view it as a vanguard electric vehicle (EV) company, riding on the wave of Elon Musk’s reputation and space adventures. What cannot be denied is that Tesla became the highest-performing stock of 2020.
Remarkably, Tesla achieved 808% year-to-date (YTD) returns, going from $86 in January per stock share to $695 in December. Currently, it holds a market capitalization of $616 billion, allowing it to enter the prestigious S&P 500 index fund. One could hardly find such massive growth in any asset, outside the initial wave of DeFi governance tokens.
Moving forward, it is not likely this growth will continue. Tesla is already lacking in some key areas compared to General Motors. Likewise, other traditional car manufacturers are more likely to develop affordable EV vehicles for the masses, such as Toyota and Volkswagen. Given the fact that Tesla is oriented on luxury EVs, reduced buying power in the upcoming year does not bode well for the company.
More importantly, when it comes to Tesla’s sales margins and car production, it is on par with other car companies. This means that Tesla’s valuation is overdue for a price correction. However, given the subjective nature of value and Tesla’s established cult following, it is anyone’s guess when this price correction might occur.
Reaching almost 500% YTD returns, the sustainable energy company took advantage of intensified renewable energy policies. Across Western nations, oil is being discouraged in favor of renewables, with the most recent example of Denmark canceling future licensing for North Sea exploitation. In American most populous state, California, rules are already set in motion to phase out gasoline-powered cars by 2035.
Within such a strong cultural and institutional framework, renewable companies are poised to thrive further. Even the latest stimulus bill contains $35 billion worth of funding for “new renewable energy measures”. Of that, $1.1 billion will go to the energy storage sector and $2.4 billion into modernizing the electricity infrastructure.
For both programs, Enphase’s well-oiled renewable delivery machine is ready to meet the demand. Since its founding in 2006, Enphase managed to deliver over 1.2 million Enphase systems across 130 countries. Just last week, the company launched Enphase Installer Network (EIN) in Australia, another nation intensifying its renewables efforts.
One would think vaccines would signify the end of lockdowns, mask-wearing, and social distancing. However, there is already talk of another strain. Even before this latest narrative, vaccines were touted as not good enough of a reason to relinquish the “new normal”.
Such an environment is a godsend for companies offering services that were previously done in public spaces. One of them is Peloton, delivering a home-exercising ecosystem through subscriptions, online fitness classes/community, and equipment manufacturing. At 385% YTD returns, the $42 billion-capped company is ready to take advantage of more lockdowns next year.
To ensure that growth, Peloton has recently made a deal to acquire Precor, a fitness equipment company valued at $420 million.
Just like with Peloton, real-time video communication has become the go-to for education, families, and businesses. Among many such platforms, Zoom took the lead due to its simplicity. In effect, Zoom has become synonymous with video-conferencing, just as Bitcoin became synonymous with cryptocurrency.
At nearly 500% YTD returns and a $116 billion market cap, the company is not waiting for lockdowns to subside. During this conducive environment, Zoom is likely to acquire both Dropbox and Smartsheet, in an effort to become an advanced work collaboration platform beyond just collaborative video-streaming.
Founded just 10 years ago, the biotech company is not like other generalist companies in the same sector. Moderna focuses exclusively on advanced, so-called “smart” drugs. In practical terms, this means messenger RNA technology for drug delivery, similar to Pfizer/BioNTech’s.
Naturally, the government’s Warp Speed program has been a boon for the firm, already delivering millions of vaccine doses. As a result, Moderna’s YTD rose by 620%, capped at $54.7 billion. With that said, there is some indication that the new experimental mRNA vaccines are not as effective as projected.
What do you think about these high-flying stocks that outperformed Bitcoin in its powerful year? Let us know in the comments below.
Disclosure:Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firms specializing in sensing, protection and control solutions.