Last week, we saw the Bitcoin price rise above $10,000. This marks a remarkable turnaround from the sell-off we saw in March. The price dipped below $5,000 as part of a global asset sell-off due to fears around the coronavirus. During the same period, we’ve also seen the FTSE 100 bounce back, with some exciting growth stocks outperforming the index. So which looks the more attractive to invest in now?
Don’t be fooled by the Bitcoin price
As quickly as the Bitcoin price can rally, it can also fall. This was highlighted last Tuesday when the price dropped around 6% in a few minutes. There seems to be no fundamental reason for this drop, other than being attributed to a bulk sale of coins. If the fall had coincided with comments from a government or central bank, or as a reaction to an economic data release, then I’d understand. Broadly, we can attribute some of the 100% returns since March to positive risk sentiment. But the rest leaves me scratching my head.
From that point of view, I don’t like to invest in something that I can’t attribute moves to, so I will be staying away from Bitcoin despite the price rally. That doesn’t mean I don’t want to make double or triple digit returns though. Growth stocks within the FTSE 100 still offer great opportunities for investors to make high profits. As publicly listed companies, you can really get a feel for the inner workings of a company. This allows you to get a feel for share price moves a lot more.
Profits available from growth stocks
A good example of a growth stock is Halma (LSE: HLMA). The FTSE 100 firm manufactures life-saving products ranging from smoke alarms to key safety systems. It already has a worldwide presence via acquisitions that allow the firm to benefit from a diversified revenue stream.
The share price is actually up this year, despite the overall FTSE 100 index being down. It’s up around 8%, despite seeing a 25% tumble in the March sell-off. In a recent trading update, profit for the year that ended in March was said to be on plan (around £265m).
In my opinion, the firm will continue to perform strongly for the current financial year for two reasons. First, safety products are a need, not a want, for clients of Halma. Regulations mean that demand should remain resilient for the firm, despite the downtrend in economic activity globally.
Second, Halma owns businesses that operate in the medical sector. One example is Cardios, which makes blood pressure monitors. Without trying to take advantage of the terrible pandemic we’re seeing, it’s logical to assume that Halma will see continuing demand as health spending remains a priority globally.
Halma is just one example of a growth stock that I think could register double-digit share price returns this year. It should do this in a much more predictable and steady way than Bitcoin, which is why I’ll be sticking to stocks.
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Jonathan Smith does not own shares in any firm mentioned. The Motley Fool UK has recommended Halma. 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.