Dogecoin (DOGE 1.41%) has emerged as one of the most hyped assets in the market today. This is understandable, considering that the crypto-asset is up 7,136.44% so far this year, far ahead of the benchmark S&P 500's returns of 11.84% in the same time frame.
Investors, however, should also consider Dogecoin's high volatility. Dogecoin has tanked by more than 50% from its all-time high of $0.74 in the last month. This cryptocurrency is not backed by any asset and hardly has any sustainable advantage over many other cryptocurrencies in terms of transaction fees or processing and settlement speeds. With no hard cap limit to the number of Dogecoins that can be mined, this cryptocurrency is extremely sensitive to headline risk.
This makes Dogecoin a highly speculative investment for retail investors -- one that should mostly be avoided. Instead, NVIDIA (NVDA -3.00%), Skillz (SKLZ 2.83%), and Jushi Holdings (JUSHF 1.31%) can prove much better picks in the long run.
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1. NVIDIA
If you want to invest in leading-edge semiconductor technology powering artificial intelligence, cloud computing, autonomous driving, 5G, and several other next-generation trends, then NVIDIA may just be the right pick for you.
In the first quarter of fiscal 2022 (ending May 2, 2021), NVIDIA reported stellar performance, despite the ongoing global semiconductor shortage. Revenues jumped 84% year over year to $5.66 billion, and diluted earnings per share (EPS) soared 106% to $3.03. In the first quarter, gaming revenues were up 106% year over year to $2.76 billion, while data center revenues jumped 79% year over year to $2.05 billion.
Long known as a leader in the gaming vertical for graphic processing units (GPUs), NVIDIA further strengthened its position by launching GeForce RTX 30 Series GPUs in September 2020. Since then, GeForce has triggered a massive GPU upgrade cycle in the gaming industry, and demand for NVIDIA-powered laptops and desktops from students, gamers, and creators has been outstripping supply.
In fact, the RTX 30 series has played a pivotal role in helping NVIDIA recapture the share of the discrete GPU market from Advanced Micro Devices (AMD -4.76%). Subsequently, the company ended 2020 with 83% of the discrete GPU market share.
NVIDIA's data center segment is witnessing solid demand from hyper-scale customers building infrastructure for providing AI capabilities to their clients. The company has also announced plans to launch its first data center central processing unit (CPU), the ARM-based "Grace" chip, by 2023. With the capability to work 10 times faster than existing servers, Grace CPU can further strengthen NVIDIA's position in the global data center market.
With this backdrop, although NVIDIA trades over 40.8 times forward earnings, the premium valuation seems justified. Investors can earn handsome returns by picking up this market-leading semiconductor stock even at these elevated levels.
2. Skillz
Mobile esports platform Skillz has been on a wild ride in the past few months. The company IPOed via the special purpose acquisition company (SPAC) route at an opening price of $17.89, reached as high as $46.30 in February, and then tanked to an all-time low of $12.40 in April. The dramatic drop has been associated with several factors such as rotation of investors from growth to value stocks, some adverse short-seller reports, ill-timed capital raise and equity dilution involving significant insider selling.
The sheer magnitude of Skillz's sell-off, however, seems unjustified. Skillz provides mobile game developers with a platform to organize competitions and then collects 15% of the gross proceeds paid by players participating in these competitions. In the first quarter of fiscal 2021 (ending March 31, 2021), Skillz's monthly active users rose year over year by 3.8% to 2.7 million, and paying user count jumped by 81% year over year to 467,000.
In an open letter to retail investors, Skillz founder and CEO Andrew Paradise has highlighted that once users start paying, they stay with the company for the long run. This highlights the high engagement level on the platform. While the company is currently focused only on paying users, it plans to explore other monetization methods such as "non-intrusive advertising" and "gamifying other industries and experiences" to add new revenue streams in the coming years.
In the first quarter, Skillz's revenues jumped 92% year over year to $84 million, ahead of its previous guidance of $80 million. The company also bumped up its year-over-year fiscal 2021 revenue growth estimate from 59% to 63%. However, this guidance does not include the potential gains from new game launches or entering new geographies.
The company has entered into a multi-year gaming agreement with the National Football League (NFL). While this deal will not add materially to the company's top line in fiscal 2021, it will attract more users to the platform. The company also plans to enter India by the end of fiscal 2021, a move expected to grow the company's addressable market by 65%. In this backdrop, chances of Skillz outperforming its fiscal 2021 guidance remain high.
Currently trading at 31 times trailing 12-month (TTM) sales, Skillz is still quite expensive, especially since the company is not profitable. However, the company is a solid bet on the growth potential of the mobile gaming market, which has grown annually at a compounded average growth rate of 23% from 2015 to 2020 . With a gross margin of 95%, cash balance of $613 million, and zero debt, Skillz offers an attractive risk-reward proposition to retail investors.
3. Jushi Holdings
Shares of U.S. multi-state cannabis operator Jushi Holdings are up over 450% in the past 12 months -- and for a good reason. Although it's among the smaller U.S. cannabis companies, the company has strategically selected markets with high growth potential and limited competition such as Ohio, Pennsylvania, Virginia, Illinois, California, Nevada, and Massachusetts.
Jushi currently operates 11 medical marijuana dispensaries in Pennsylvania and plans to open an additional seven in 2021. This footprint seems even more impressive considering the limited licensing structure in Pennsylvania, which reduces competition.
With the state having 528,000 registered medical marijuana patients and expected to rake in $1.5 billion in revenues by 2023, Jushi stands to benefit dramatically in coming months. As Pennsylvania moves toward legalizing recreational marijuana, Jushi's extensive presence can help establish its brands rapidly in this new market.
Jushi currently operates four dispensaries in Illinois, a state which legalized sales of recreational cannabis starting Jan. 1, 2020. With an estimated 2021 annual run rate of $1.3 billion, Illinois is well-positioned to be a major revenue driver for the company. The company also holds one of the only five vertically integrated licenses in Virginia -- allowing the company to cultivate, process, and sell medical cannabis to customers in a market with limited competition. Virginia is also expected to commence recreational cannabis sales in 2024, which will further boost Jushi's addressable market.
In first-quarter 2021 (ending March 31, 2021), Jushi's revenues rose 29% sequentially to $41.7 million. The company also has a strong balance sheet with $168 million cash and $82 million debt. Against the backdrop of a robust strategy and solid financials, Jushi could prove to be an attractive investment for retail investors.
