Why I Believe This Stock Should Take Apple’s Place in the “Magnificent Seven”

Why I Believe This Stock Should Take Apple’s Place in the “Magnificent Seven”

The “Magnificent Seven” stock club is almost a year old now, and some of the predictions that originally inspired it are playing out as expected. The “baby bubble” that Bank of America analyst Michael Hartnett foreshadowed in May 2023 is losing some air.

I’m looking at you, Tesla (TSLA -2.25%) and Apple (AAPL -1.06%).

The electric vehicle pioneer and the iPhone maker have underperformed the S&P 500 (^GSPC 0.11%) index since the term Magnificent Seven entered Wall Street’s lexicon. In fact, Apple investors have lost money on the stock since Hartnett first used the classic Western movie title in a public report.

They are still business giants with popular products and trendsetting market footprints. Apple holds on to its trendsetting status by sheer scale — not many stocks can claim a $2 trillion market cap, after all.

Yet it might be time someday soon to rethink the Magnificent Seven components. Apple can regain its seat with another round of game-changing innovations and unheard-of product ideas (the Vision Pro headset probably won’t do that job in 2024).

And I think it’s time to give the crypto market a seat at the Magnificent table. History suggests — supported by planned technical upgrades to leading cryptocurrency systems — that another massive price surge is coming up soon. To shrug off this incoming surge as if nothing is happening would be a big mistake.

That’s why I’d like to print a Magnificent Seven membership card for Coinbase Global (COIN 3.28%), North America’s leading crypto exchange and digital assets promoter.

Coinbase is a big deal in 2024: Here’s why

The Magnificent Seven combine amazing innovation and financial might. They dominate large-scale global markets with pioneering technologies and robust investment in research and development (R&D). As undisputed leaders in their fields, their significant impact on market indexes and clear growth trajectories can shape the future economy.

Coinbase fits that description to a T. In fact, I would argue that the crypto wrangler’s growth trajectory and R&D spending leave Apple far behind.

The company stands at the heart of the cryptocurrency revolution, perfectly placed to capitalize on these upcoming industry milestones:

  • With the upcoming Bitcoin (BTC 0.90%) halving, historical trends hint at a potential uptick in market activity, drawing attention across the cryptocurrency landscape. This event, along with Ethereum‘s (ETH 1.22%) stepwise upgrades toward a more scalable network, signals a pivotal moment for blockchain technologies.
  • The growing interest in Web3, with its focus on privacy, decentralized finance, and a more user-centric internet, further highlights the sector’s potential for expansion. These innovations should generate increased market activity and broader investor interest over time. As a key platform offering access to important Web3 cryptocurrencies such as Bitcoin, Ethereum, and Polkadot (DOT 0.22%), Coinbase will undoubtedly benefit from this trend.
  • And the introduction of Bitcoin spot-price exchange-traded funds marks a significant leap toward integrating cryptocurrencies into the mainstream financial ecosystem. These developments not only underscore the market’s maturity but also widen the investor base, channeling more transactions through platforms like Coinbase. Old-school banks are not ready to offer crypto transactions or digital wallets yet, giving Coinbase a huge head start in a digital economy.

In this rapidly evolving landscape of digital assets, Coinbase is strategically positioned to leverage the anticipated growth and increased adoption of cryptocurrencies. These technological advancements and regulatory milestones set the stage for an intense crypto drama over the next couple of years.

Why Coinbase belongs in the stock market elite

Game-changing success is never easy, and Coinbase also faces many difficult challenges.

The regulatory rule book can change in a heartbeat, perhaps moving in different directions across various countries. The real-world pricing effects of Bitcoin halvings have been predictable so far, but there’s no certainty that the next one will unleash the same results. Quantum computing might break the encrypted security model of Bitcoin, Ethereum, and other leading cryptocurrencies, forcing a brand-new technical design in the long run.

I could go on, but you get the picture: Coinbase’s near-term and long-term success could be quite likely, but I can never call it “guaranteed.”

But that’s why they play the game, right?

One investor’s best idea can be another’s darkest nightmare, and the price of any stock or cryptocurrency is negotiated to settle their differences of opinion. In the long run, the underlying business proves who’s right and who’s wrong. And in this case, I think Coinbase’s growth prospects should lead to impressive shareholder gains in 2024 and beyond.

And Coinbase will do it in a market-defining way with a heavy dose of innovation. That makes it a robust “Magnificent” candidate, ready to step in if and when Apple misplaces its membership card.

Adding Coinbase to the Magnificent Seven vernacular just before the crypto market takes off again could make Wall Street analysts look like prophetic geniuses for a while. So move over, Apple, I think it’s time to hand that seat over to Coinbase — at least for a while.

Anders Bylund has positions in Bitcoin, Coinbase Global, Ethereum, and Polkadot. The Motley Fool has positions in and recommends Apple, Bitcoin, Coinbase Global, Ethereum, and Tesla. The Motley Fool has a disclosure policy.

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