American investment banking giant, Goldman Sachs, has identified a growing crop of US companies with exposure to blockchain and cryptocurrencies that have seen their stocks ‘dramatically outperformed’ the broader S&P 500. As prices of Bitcoin and other cryptocurrencies soared in 2020, some companies were seen as proxies of this nascent but highly lucrative industry.

Such companies attracted the demand and attention of profit-seeking investors who maybe could not take the risk of directly investing in crypto coins and tokens. Analysts at Goldman Sachs narrowed down to 19 US stocks with a minimum market capitalization of $1 billion. The stocks posted an average gain of 46% compared to the average gain of 13% posted by the S&P 500.

In addition to the minimum $1 billion market capitalization, Goldman analysts also had 3 other considerations when coming up with the list. They looked at companies that mentioned blockchain or Bitcoin in transcripts of their earnings calls or public filings and presentations. They also considered stock prices that had shown the most correlation with Bitcoin prices over a period of 12 months. Membership in major crypto or blockchain indices or ETFs was also considered.

The 19 companies include Marathon Digital Holdings, Riot Blockchain, MicroStrategy, Silvergate Capital, PayPal Holdings, Overstock.com, Nvidia, Investview, Ideahomics, Tesla, JPMorgan Chase, Visa, Bank of New York Mellon, Facebook, Mastercard, Broadridge Financial Solutions, IBM, and Coinbase Global.

The list is orderly, with stocks ranked from the top to bottom in terms of correlation and outlook. The first seven companies received the highest possible score of 9. Nvidia scored 7, and all the remaining companies all scored 6. The curious observation is Coinbase, which definitely deserves a score of 9 but this was not the case because Coinbase only listed recently, and Goldman had a heavy consideration on prices of stocks over a prior period of 12 months.

The composition of the Goldman list includes companies from various industries such as Crypto Mining, Financial Services, Technology, Chipmakers, Payments Services, and crypto Exchanges.

The list provides a reliable guide for investors who wish to gain exposure to blockchain and cryptocurrency. But the stocks therein also come with some risks attached. The stocks are currently overvalued and the volatility of cryptocurrencies can also impact their prices. Nonetheless, they will continue to be viewed as crypto ‘pioneers’ and have already outperformed the market!