Cryptocurrencies have been a hot commodity at various times over the last decade when price charts seemed to move up and down endlessly. But 2022 was not such a time.mainstream cryptocurrencies like Bitcoin Over the last year, some cryptocurrencies have fallen in value by more than 50%. Shiba Inuexceeded 70%.
Part of this decline can be explained by recent reports of fraud involving FTX Trading and its founders Sam Bankman-Fried and Gary Wang. Some naysayers prefer to point to industry concerns over a currency that appears to have no underlying business fundamentals, making it nearly impossible to assess accurately.
Investing your hard-earned savings into something that has a lot of hype associated with it didn’t work out well for investors in 2021. It still won’t in 2023. It’s still proven. Instead of taking a chance in the crypto industry, investors will instead focus on these three ironclad stocks in their portfolios.
1. Dropbox: Stable Recurring Revenue
drop box (DBX 0.27%) was one of the hottest startups to emerge from Silicon Valley in the early 2010s, apple Founder Steve Jobs. Since then, many have forgotten about the file storage and workplace management software company, whose current share price is about 20% below his 2018 IPO price.
The stock may be down, but business is doing well in the meantime, making it a great buy for long-term investors. Last quarter, Dropbox paid users reached 17.55 million, up from 12.3 million during the same period in 2018. Average revenue per user (ARPU) went from $118.60 to $134.31 over the same timeframe. This is the secret to the steady top-line growth Dropbox has shown since going public. Last quarter, annual recurring revenue (ARR) reached $2.4 billion.
Dropbox is also highly profitable, generating $736.4 million in free cash flow over the last 12 months. Management has set a goal of reaching his $1 billion in annual free cash flow by 2024. With a current market cap of $8 billion, the stock trailing price to free cash flow (P/FCF) ratio would be 11 and the forward P/FCF ratio would be 8 based on 2024 guidance. For a business with recurring revenue and continued growth, Dropbox looks like a steal at this price point.
2. Alphabet: Search Engine Monopoly
move to a larger business, alphabet (GOOG 1.60%) (Google 1.32%), Google, YouTube, Waymo, and other tech giants that own properties. Much of this business is still driven by Google searches, and his $39.5 billion in sales last quarter accounted for his 57% of Alphabet’s total sales. Over the past 12 months, the business has generated $78.5 billion in operating income for him. That number has grown 400% over the past decade and has been a key driver of Alphabet’s stock performance over that period.
Going forward, Alphabet’s long-term growth will likely be driven by its younger YouTube and Google Cloud businesses. Both segments generate less than $10 billion in quarterly revenue (small for Alphabet), but have shown impressive growth over the past few years. And let’s not forget Waymo, the self-driving division of fast-growing industry leader Alphabet. Subsidiary taxi services have only been launched in a few US markets and currently contribute little to the company’s consolidated financials. However, if the autonomous taxi network can be deployed globally, it has great potential.
GOOG Operating Margin (TTM) Data by YCharts
With its dominant position in the search market and the rapid growth of many small businesses, Alphabet looks like the perfect stock for investors looking for long-term, diversified growth.
3. Altria Group: For those familiar with tobacco companies
Interested in tobacco stocks? Altria Group (MO 2.38%) A good dividend stock to have in your portfolio.
The company owns Philip Morris and itself sells the popular Marlboro cigarette brand in the United States. The company achieved an average annual gross profit of 17.7% from 1926 to 2016. This is the magic of compound interest and stable industry profits.
MO free cash flow data per share by YCharts
Admittedly, Altria has not generated such a high level of total return since 2016. Altria Group is currently a low-growth stock that rewards investors primarily through dividends, paying out the bulk of its earnings to shareholders. His dividend per share over the last 12 months was $3.64 (currently yielding 8.3%), just below free cash flow per share of $4.46. This is in direct contrast to valueless cryptocurrencies, and Altria’s returns are driven by consistent earnings power that continues to grow year after year and fund its large dividends.
However, Altria Group has one problem. Tobacco sales are declining across the United States (major regions). To combat this, the company has invested heavily in less harmful products such as nicotine pouches, cannabis and e-cigarettes. With a very high dividend yield of 8.3%, investors can benefit from holding Altria Group shares in their portfolios for the next 10 years. can.
Alphabet executive Suzanne Frey is a member of The Motley Fool’s board of directors. Brett Schafer has no positions in any of the mentioned stocks. The Motley Fool has positions in and recommends Alphabet, Apple, and Bitcoin. The Motley Fool recommends the following options: Apple’s March 2023 $120 Long Call and Apple’s March 2023 $130 Short Call. The Motley Fool’s U.S. headquarters has a disclosure policy.
