The price of Bitcoin and its peers were down sharply in early afternoon trading on July 19. Bitcoin is now hovering around the US$30,000 mark after reaching above US$60,000 in the middle of April. That is a sharp plunge that has punished newcomers. Standard Canadian and U.S. indexes are not faring much better today. The S&P/TSX Composite Index was down over 320 points at the time of this writing. I’m ducking Bitcoin in this environment. However, there is one TSX stock that I’m still interested in even in this turbulent climate.
Here’s why I’m not buying into the Bitcoin dip
Back in May, I’d discussed why Bitcoin and its peers in the cryptocurrency space had encountered resistance. Digital currencies had been under fire from international regulators for months. Elon Musk, who had been something of a crypto cheerleader, hinted on social media that he may exit the market. Moreover, Tesla ditched its plans to allow consumers to buy its products with Bitcoin.
Bitcoin hit huge milestones over the past year. Canada launched the first-ever Bitcoin-focused exchange-traded fund (ETF) with Purpose Bitcoin ETF (TSX:BTCC.B). That ETF has plunged over 40% since making its debut in late February. I’m not eager to get in on this highly volatile market right now.
Look to this red-hot TSX stock instead in July
Kinaxis (TSX:KXS) is an Ottawa-based company that provides cloud-based subscription software for supply chain operations in Canada, the United States, and around the world. This TSX stock proved resilient during the March 2020 market pullback. Its shares were up 2% in mid-afternoon trading on July 19. Can it defy broader market turbulence again?
Canadians should be excited about Kinaxis’s role in the supply chain software space. This spring, Allied Market Research projected that the global supply chain management market would reach $37.4 billion by 2027. This would represent a CAGR of 11% over the projected period. The COVID-19 pandemic has further complicated the system of global trade and intensified demands on companies. Kinaxis’s revolutionary software has the potential to play a role in smoothing that transition.
The company is set to unveil its second-quarter 2021 results on August 5. In Q1 2021, Kinaxis delivered revenue growth of 9% to $57.7 million. SaaS revenue increased 19% to $40.6 million. Moreover, the company released full-year guidance for 2021. The company projects SaaS revenue growth between 17-20% for the full year. Meanwhile, it anticipates total revenue to come in between $242-247 million, with an adjusted EBITDA margin between 11-14%.
Why I’m buying Kinaxis over Bitcoin
This TSX stock has regained momentum after suffering sharp dips in March and June of this year. Kinaxis’s success has put Canada into a leadership position in this developing market. Bitcoin, however, seems to be losing traction among the mainstream in the summer of 2021. Digital currencies are not going to disappear anytime soon, but the bull market we saw over the past 12 months seems to have petered out for the time being.