With the Bitcoin price having declined by more than 80% in just over a year, some investors may be wondering if it represents a recovery opportunity. After all, a digital currency seems like a plausible idea, with much of the world economy becoming increasingly digitalised.
The reality, though, is that Bitcoin’s price could be negatively impacted by reduced demand as investor sentiment remains weak. And its lack of fundamentals means that it may struggle to justify a lofty valuation.
In contrast, Sirius Minerals (LSE: SXX) has also fallen heavily, but has a clear growth strategy which could lead to improving stock price performance. Alongside a stock which released an update on Tuesday, it could be worth buying for the long run in my opinion.
The company in question is self-storage specialist Safestore (LSE: SAFE). It released encouraging full-year results which showed that it has been able to deliver improving organic growth. Revenue increased by 10.8%, with LFL (like-for-like) revenue rising by 5.2%. Its underlying EBITDA (earnings before interest, tax, depreciation and amortisation) increased by 11% to £82.9m, while it was also able to continue to successfully integrate recent acquisitions.
It continues to seek high-quality sites to open new stores. It added four new stores to its pipeline, which means it plans to open three new stores in the current year and a further one next year. Since it has been able to increase LFL occupancy across its portfolio by 2.7 percentage points per year over the last five years, its business model seems to be working well.
With Safestore forecast to post a rise in earnings of 7% in the current year, it could deliver improving share price performance. Having declined by 7% in the last six months, its shares may offer recovery potential.
Sirius Minerals also offers turnaround prospects. The stock’s fall in recent months has highlighted the risky nature of its business, but overall its progress continues to be strong.
Higher than expected costs for the project, as well as continued uncertainty surrounding its financing, have caused investors to question the prospects for the business. However, it remains on target to meet its financial and operational goals over the coming years.
As with Bitcoin, valuing Sirius Minerals is challenging. The company’s lack of sales, and its lofty production and financial estimates, mean that its share price is largely dependent upon supply and demand in the short run.
The company, though, has a clear path to future sales, profit and stock price growth. It has thus far been able to deliver on its strategy, and it appears to have clear catalysts through which it may deliver relatively high returns for its investors. Although there may be further challenges ahead, its long-term goals remain highly appealing for less risk-averse investors. In contrast, Bitcoin seems to be a speculation, rather than an investment.