Bitcoin investors were feeling that dreaded sense of déjà vu this month. Volatility is the name of the game with the cryptocurrency sector, but an 8% price drop within just a couple of days, from five-month peaks above $5,370 on April 10 to back below the $5,000 marker, must have had owners of the speculative asset wringing their hands again.
Now Bitcoin’s consolidated back above this psychologically-critical marker, stemming fears of another sharp plunge lower. But there’s still plenty of reason why the currency could sink yet again.
Its heady price rise in 2019 has been built on expectations that a crypto-based exchange traded fund (ETF) could receive approval by the US Securities and Exchange Commission (SEC). However, a regulatory sign-off in the near future, or indeed at any point, is not exactly a given — public comments on the potential rollout of an ETF following an SEC solicitation request haven’t exactly been overwhelmingly positive so far.
Failure for one of these ETFs to get the go-ahead would prompt a sharp reversal of the Bitcoin price gains reported this year and really exacerbate concerns over the legitimacy of the currency as a serious asset class.
Plagued with risk
Why take a chance on the digital currencies, then, when there’s plenty of what I would consider ‘better’ ways to make your money work for you? No-one knows where Bitcoin will be at the end of 2019, let alone in the next five or 10 years. And while share market participation also involves a degree of risk, it’s nowhere near as flaky as that of the crypto assets.
Take SThree (LSE: STHR), for example. I have no doubt the massive investment this FTSE 250 stock has made to bolster its global footprint will deliver some serious shareholder returns in the years ahead. Latest results released last month reinforced my bullishness.
The impact of Brexit uncertainty now, and the possible economically-devastating impact of a no-deal European Union withdrawal into the next decade and beyond, isn’t something that SThree has to worry about. Less than a fifth of group gross profits are sourced from these shores, meaning that even as the bottom line for its UK and Ireland division fell 7% in the three months to February, total profits rose 9% year-on-year.
The key to this strong result? Further strong growth in its key markets of Continental Europe and the US, territories in which gross profits swelled 12% and 17%, respectively, in the first fiscal quarter.
5% dividend yields!
It’s no surprise to me City analysts expect nothing less than mid-to-high single digit earnings expansion over the next couple of fiscal years, then, projections that provide the bedrock for predictions of extra dividend growth through this period.
Indeed, total payouts of 15p and 15.7p per share are anticipated for the periods ending November 2019 and 2020, respectively, figures that yield a spectacular 4.9% and 5.1%. An added bonus is that right now the recruiter is valued extremely cheaply, SThree carrying a forward P/E ratio of just 9.4 times. At current share prices I reckon this is a great buy today, and a vastly-superior investment to the likes of Bitcoin.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2019