It may sound like a cliché at this point, but when there’s a gold rush, the folks selling picks and shovels tend to be the ones to make a consistent profit. No matter what the industry, the key suppliers are the ones that tend to perform the best as other companies in the space duke it out for market share.
That’s why such companies could provide great returns here. With many companies still reporting supply chain issues, suppliers that can deliver can likely reward shareholders.
One compelling supplier is Silvergate Capital (SI). The bank holding company has become a key integrator for digital currency services. The company has managed to double its net income in the past year thanks to rising demand for cryptocurrency integration services.
Shares are now flat over the past year, even as the company has gone from trading at 105 times earnings to 30 times forward earnings.
Action to take: Investors may like shares here, as the company is poised to continue benefitting from the growth of cryptocurrency investments. While the company doesn’t pay a dividend, the rapid growth and strong balance sheet makes for an interesting investment here.
For traders, options carry a bit of a premium to them. Nevertheless, the August $170 calls, last going for about $11.50, offer mid-to-high double-digit returns in the months ahead.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.