Over the past six months, the BP (LSE: BP) share price has risen an impressive 27%, and over a year it’s up 18%, currently sitting at 378p. While this has meant some healthy returns for investors, it’s still a way off of the pre-pandemic share price. That being said, with the price of oil closing in on the $100 mark, are BP shares the next growth opportunity for my portfolio today? Or should I steer clear of the UK oil and gas giant? Let’s take a closer look.

The bull case for BP shares

BP released its 2021 full-year results on February 8. The $12.8bn profit figure stood out immediately to investors, and the share price rose over 4% in the days after the release. By comparison, in 2020, BP saw a $5.7bn loss, the latest figure highlighting the turnaround for the firm. It also announced it had reduced net debt for the seventh consecutive quarter. In my eyes, both these factors highlight the managerial strength of the business, which encourages me to buy the shares.

These impressive results helped boost analyst expectations. JP Morgan increased its target from 590p to 600p, with Morgan Stanley also raising its target from 401p to 465p. As mentioned, the current price is just 378p. This gives me confidence that the shares could be a great long-term investment for my portfolio.

Considering the value of its shares, BP is trading on a forward price-to-earnings ratio of 6.6. This seems good value to me, especially considering the recent high profits. Competitors Shell and ExxonMobil are currently trading with 7.7 and 12.3 P/E ratios, respectively. This suggests to me that the current BP share price is undervalued.

BP share price: bear case

An obvious risk I see for BP shares is the global shift towards net zero and increasing ESG concerns among companies. Although BP has made a concerted effort towards cutting emissions, moving forward it’s going to take a huge amount of investment to keep these projects up. The firm already operates with very slim margins, which will come under pressure from outward investment.

In addition to this, the nature of BP’s business is very cyclical. At the moment, commodity prices are soaring, which is great for the business. However, if oil and gas prices crash, the company is in big trouble. This gives it an element of uncertainty in the long term.

BP announced yesterday its plans to divest its 19.75% stake in Russian oil giant Rosneft, following the Russian invasion of Ukraine. This is expected to result in a costly $25bn in exit charges, largely from foreign exchange. Whilst it has insisted this won’t impact any of its long-term strategic and financial targets, it’s definitely a worrying cost.  

The verdict

All things considered, I think that BP shares could be a great addition to my portfolio at its current price. The cheap valuation certainly looks appealing to me, especially considering the encouraging 2021 results. Therefore I would consider buying the shares for my portfolio today.

Dylan Hood has no position in any of the shares mentioned in this article. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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.

As earning season winds up, attention starts to shift towards dividends. With the average dividend yield of the S&P 500 pencilled in at 2%, the following three stocks in Berkshire Hathaway’s portfolio have high dividend yields that are more than double the market’s average, giving me the potential to earn some passive income during quieter periods of the year. In addition to that, these stocks are also excellent value as they hold defensive positions, making them extremely useful for my portfolio during a time of market volatility.

Buying the dip

To start with, this stock is one of Warren Buffett’s biggest holdings in his portfolio, at 3.5%. Kraft Heinz, the ketchup giant, has declared a dividend of $0.40 per share, bringing its dividend yield to 4%. With its ex-dividend date coming up on 10 March, I will be looking to buy any dips in its share price in order to maximise its high dividend yield. Additionally, the stock itself has done relatively well as compared to the S&P 500, as it is up 10% year-to-date (YTD). The company also reported superb earnings with positive guidance recently, giving me even more confidence to hold the stock past its ex-dividend date.

4.7% dividend yield on the Verizon

Along with utilities and energy, telecommunication stocks tend to gain a lot of attention in times of a bear market due to their defensive nature, which is why my eyes are firmly set on Verizon. Along with its potential ability to protect my investments more securely as a defensive stock, its 4.7% dividend yield makes it the highest dividend stock within Warren Buffett’s portfolio. Although its ex-dividend date is slightly over a month away in April, I see this an opportunity to conceivably buy shares for a bargain before dividend investors start flocking towards the stock.

Fuel for my portfolio

For all the geopolitical conflict and soaring inflation that has occurred over the past couple of months, Chevron (NYSE: CVX) has been one of the largest beneficiaries. The stock itself has done the complete opposite of the S&P 500, jumping 17% in value (YTD). As analysts forecast the price of oil to shoot up to $120 per barrel, the energy giant stands to continue reaping rewards. For that reason, it should be expected that profit margins will increase, and its dividends along with it. Potential upside to its share price at $143 and a dividend of $1.42 per share gives me the opportunity to hedge my portfolio against any further downside in the overall market, all while also earning me passive income with its 4% dividend yield.

Something to keep in mind

There are a couple of things that are worth pointing out, however. First of all, with all three stocks being US holdings, UK investors will have to account for a potential withholding tax of 15% on any dividends. Secondly, there is also a possibility that the market rebounds from its current position. This could possibly make these companies less attractive as investors may opt for tech and growth positions. Nevertheless, I will be watching how the economic and geopolitical situation plays out over the coming days and weeks as I plan to adjust my portfolio accordingly.

John Choong 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.

Argo Blockchain (LSE: ARB) shares have had a rough 2022 so far. Currently sitting at 63p, the shares are down almost 30% year-to-date and 76% over the past 12 months. The primary driver behind this is the bearish crypto market, which Argo is almost wholly dependent on to generate revenues. However, having fallen so much in recent months, could now be a good time for me to buy Argo Blockchain shares for my portfolio? Or should I stay away from the Bitcoin mining giant? Let’s take a look.

Impressive growth

Argo operates with a simple business plan: it mines Bitcoin and other cryptocurrencies. The way that it does this is by validating and recording transactions on the blockchain and receiving crypto in the process.

In the most recent investor presentation released in February, Argo informed traders it held 2,748 Bitcoin and Bitcoin Equivalents. The firm is currently operating with 83% mining margins – the industry-leading standard – which helped it post record setting Q3 2021 revenues of £19.3m. From 2018, Argo’s revenue has grown at an eye-watering 351% compound annual growth rate. These results affirm the explosive high growth of the firm, which does fill me with confidence for the future.

Another positive for Argo Blockchain shares that I took away from the investor’s presentation was the forward-looking plans the firm has:

Firstly, its new Texas mining facility is set for completion by October 2022. The 200MW facility is expected to increase total mining power by over 130%. If the price of Bitcoin can rise, or remain stable, this expansion is likely to significantly boost revenues.

Secondly, the firm has announced it building its presence in Quebec, due to the low cost, clean hydroelectricity. Wind power will also predominantly power the Texas facility. This will help the firm maintain 100% carbon neutrality.

Bitcoin dependency

Although Argo has exhibited some impressive growth, in my opinion, its business plan is too heavily reliant on the price of Bitcoin. The Texas facility is expected to more than double the mining capacity of the firm. However, since November 2021, the price of Bitcoin has fallen by over 40%. Similarly, Argo Blockchain shares have fallen over 50% during the same period. Therefore, unless Bitcoin recovers, the new facility isn’t guaranteed to produce significant revenues.

It is, however, guaranteed to increase debts. The high debt taken on by Argo could harm profitability in the coming years. What’s more, with interest rates rising across the globe, these debts could become increasingly costly for the firm, further reducing margins and pressuring profitability.

Should I buy Argo Blockchain shares?

Overall, I do like the trajectory that Argo Blockchain is following. Its high growth and carbon-neutral outlook are very enticing. That being said, the fundamental business plan worries me. The heavy volatility of the crypto markets has the potential to offset any positive expansion of Argo. This is a huge red flag for me. As such, I won’t be adding any Argo Blockchain shares to my portfolio any time soon.

Dylan Hood has no position in any of the hares 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.

The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which carry several risks, including the total loss of any monies invested. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Unilever (LSE:ULVR) shares have been under pressure lately and the company has garnered a lot of headlines. These criticisms include a stinging condemnation from Terry Smith, a major investor in the floundering fast moving consumer goods (FMCG) group. The share price is down about 7.6% so far this year, which means Unilever shares are underperforming the FTSE 100 benchmark.

What’s gone wrong?

Many investors would have thought a company like Unilever, with its strong brands, ought to be a good investment in a time of rising inflation. Why? Because the power of the brands, in theory, should mean it can raise prices and not lose too many customers. If people really love a certain branded shampoo, for example, they’ll buy it even if it goes up by 10p. Only the most price-sensitive customer probably even notice a rise in the price – if it’s small and the price rises are infrequent.

The problem Unilever has is its not really growing volumes, while its costs are rising. This is making growth tricky and squeezing margins. It has already stated that the underlying operating margin for 2022 is expected fall by to 16%-17%, from around 18.4% previously.

It has also recently once again got on the wrong side of a lot of investors by seeming to try and buy growth, when it was revealed it had made bids for the consumer division being spun out of GlaxoSmithKline. That deal potentially would have cost upwards of £50bn.

Could Unilever shares outperform the FTSE 100?

Of course, there’s a chance the bad news facing Unilever is already priced in and that the shares could rebound. One catalyst could be the presence of the US activist investor Nelson Peltz on the share register. He has a track record of unlocking value in FMCG companies and could along with other investors push Unilever’s management to be bolder and focus more on growth and unlocking shareholder value.

Unilever does, all being said, still have global sales and strong distribution networks and a staple of brands spanning beauty, nutrition, and home care. So a big benefit is that its success isn’t reliant on any one type of product, or any one country. Its risk is very diversified.

Unilever shares do also now yield a fairly attractive dividend of just under 4%. So there is a recovery potential alongside income. 

Finally, Unilever’s most recent set of results were arguably better than Reckitt’s. Reckitt saw net revenue and operating profit both fall, so it’s not firing on all cylinders either.  

A better alternative

It’s all very well to be critical of Unilever and at the end of the day I won’t be buying the shares. I prefer Diageo shares. The beverages group has many of the same upsides as Unilever, but is performing much better. For example, it also has strong brands and global sales, and strong distribution networks. It also will benefit from an expanding global middle class, many of whom will want to drink better alcoholic drinks. The big problem with the beverages company is that its shares are expensive. They trade on a price-to-earnings ratio of 30.

Unilever shares may well continue to struggle while conditions seem set to allow Diageo to keep up its good momentum. The latter’s shares could well keep doing better than Unilever’s.

Andy Ross owns shares in Diageo. The Motley Fool UK has recommended Diageo, GlaxoSmithKline, Reckitt plc, and Unilever. 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.

Key points

• A number of companies with links to Russia and Ukraine fell as much as 33.9% in a single day
• Beazley is a strong insurance firm, with very solid results
• The TUI share price is still low and the business will benefit from relaxed pandemic restrictions

Towards the end of last week, the stock market declined dramatically. Indeed, the FTSE 100 index fell 4% in a single day. This was primarily caused by the Russian invasion of Ukraine. While most firms fell to some degree, some companies with Russian or Ukrainian exposure saw their share prices plummeting. Evraz, the iron ore miner controlled by Russian businessman Roman Abramovich, fell 29.5%. Furthermore, the gold company Polymetal dropped 33.9%. Wizz Air, an airline based in Hungary, crashed 11.3%. Due to their locations, all three of these firms were directly impacted by the military action. The next day, however, they were up 19.5%, 17%, and 12% respectively. That’s why I’m writing about a stock market correction, not a stock market crash. During this dip, I think I’ve found two strong companies to purchase for the long term as market volatility continues. Let’s take a closer look.

An insurance firm for a stock market correction

The first business, Beazley (LSE: BEZ), is a non-life insurance company operating across the globe. Its share price fell 6% last Thursday, to 448p, and rebounded 3.9% the following day. At the time of writing, it’s trading at 454p and is still below where it was this time last week, despite being up 28% year-on-year. Between calendar years 2017 and 2021, its earnings-per-share (EPS) increased from ¢25 ¢50.9. By my calculations, this means that the firm has a compound annual EPS growth rate of 15.3%. This is very strong and consistent.

Furthermore, revenue increased over the same period from $2.3bn to $4.6bn. Needless to say, things are going in the right direction. Investment firm ShoreCap also recently stated that Beazley was “well capitalised”. This is attractive, given the current stock market correction. On the other hand, its forward price-to-earnings (P/E) ratio is slightly higher than major rival, Axis Capital. This may indicate that the company is not necessarily cheap.

A FTSE 250 travel firm

The second company, TUI (LSE: TUI), is a travel business operating flights, hotels, and cruises. It fell 4% during the initial sell-off, to 237p, gaining 6% the next day. At the time of writing, it’s again trading at 237p, down 22% in a year.

In a trading update for the three months to 31 December 2021, the company announced that revenue had risen to €2.4bn. This was an increase from just €0.5bn for the same period in 2020. Furthermore, its losses narrowed from €675.8m to just €273.6m over the same period. These improving figures are exactly what I want to see when responding to a stock market correction. It’s worth noting, however, that progress may be impacted if another Covid variant emerges.

It may also be cheap when compared with easyJet. TUI has a forward P/E ratio of just 21.19, while easyJet’s is 142.86. Although the share price is low on account of the recent market volatility, I’m pleased that the company may also be undervalued. 

The stock market correction has caused panic, but I’m staying calm and sticking to my principle of buying quality growth stocks at bargain prices. I will be purchasing both Beazley and TUI today for my long-term portfolio. 

Andrew Woods 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.

A lot of people think about buying shares but put it off until they have more money to invest. But I do not think that is necessary. I do not need a lot of money to start investing in shares. Here is how I would begin, if I had a few hundred pounds to invest.

Be clear on objectives

First I would want to decide why I was investing in shares at all. That might sound obvious – people invest in shares to make money. But I do not think it is quite as simple as that.

For example, if I was hoping to watch the value of my investment grow over time, I might decide to focus on what are known as growth shares. But if I wanted to start investing with an eye on funding big expenses in the future, like school fees or a golf club membership, it might make more sense for me to focus on shares that would hopefully pay me regular dividends.

In the beginning, the difference could seem minor. If I was investing £500 in dividend shares, for example, even some of the highest-yielding shares on the market would probably only give me £50 or so of passive income a year. But investment is a long-term activity. Getting into good habits from the very beginning could shape the success of my investment in years to come.

Focus on not losing money

When it came to selecting shares to buy, would the best ones for me be those that could give me the highest financial return?

Nobody knows what financial return a share will provide in future. So instead of focusing only on the possible financial upside, I would do the opposite. When selecting shares, I would start by focusing on those I felt were least likely to lose my money. Hopefully they would make me money. But if they did not, the less money I lost the better.

That may sound strange, but as investor Warren Buffett says, rule number one of investing is not to lose money – and rule number two is never to forget rule number one. Practically, that means avoiding the temptation to invest in potentially very rewarding but highly risky shares. Instead, I would begin investing by looking for companies with lower risk profiles.

How I would start investing in shares

So although a company like Evraz has a very high dividend yield at the moment, the political risks involved mean its share price could plummet. By contrast, a less racy blue-chip like supermarket chain J Sainsbury has less potential upside in my view. I do not expect Sainsbury’s dividend to hit double-digits like Evraz’s. But I also think its risk profile is lower.

It could still fall in price, for example because increased online competition hurts profit margins. But I do not see Sainsbury’s facing the sort of enormous risks to profit Evraz could face from political risks. That said, Sainsbury’s could come a cropper in ways I do not expect. That is why I diversify my share portfolio, to reduce the overall risk. With a small amount to invest, managing my risks smartly would be critical to my prospects of success.

Christopher Ruane 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.

Apparently, there was a brief stock market crash this week. However, if I’d skipped Thursday, I would have missed it. Over the five trading days to Friday, the FTSE 100 index lost a mere 24.16 points (-0.3%). On the other side of the Atlantic, the S&P 500 index actually gained a miniscule 0.08 points over the past week. Russia invaded Ukraine on Thursday, but the day’s slump was followed by Friday’s pump. Once again, investors worldwide rushed to ‘buy the dip’ by sweeping up cheap shares.

I’m hunting for cheap shares

Though the S&P 500 has lost 8% of its value so far in 2022, I still regard US shares — especially speculative tech stocks — as historically expensive. That’s why my family portfolio stopped buying US stocks a few months ago. However, in historical and geographical terms, the FTSE 100 looks cheap to me today. That’s why I’m constantly scouring the Footsie, looking for cheap shares and recovery plays to buy.

For the record, the FTSE 100 has gained 1.4% so far this year, making it one of the world’s best-performing stock markets in a volatile 2022. However, not all Footsie shares have done well lately. Indeed, some stocks trade closer to their 52-week lows than their 52-week highs. One of these cheap shares to catch my eye is investment manager M&G (LSE: MNG). It’s down nearly 2% this year.

It was founded in 1931 and launched the UK’s first mutual fund that year. The business was part of the giant Prudential group until October 2019, when it was spun off as a separately listed company.

M&G looks cheap to me

On Friday, the shares closed at 210.6p, up 9.3p (+4.6%) on a day when the FTSE 100 leapt 3.9%. This values the asset manager at £5.5bn. However, at its 52-week high, the M&G share price hit 254.3p on 1 June last year. At its 52-week low, the stock slid to 182.95p on 26 February 2021 — almost exactly a year ago. And although the shares have gained 14.5% in the past 12 months, they still look attractive to me today.

At Friday’s closing price, M&G shares trade on a forward price-to-earnings ratio of around 10 and an earnings yield of 10%. But what really draws me to M&G is its hefty dividend yield. Currently, this stands at 8.7% a year. That’s around 2.2 times the FTSE 100’s cash yield of roughly 4% a year. To me, it’s this cash payout that makes M&G one of the cheap shares I want to own. Of course, company dividends are not guaranteed — they can be cut or cancelled at any time. Indeed, dozens of FTSE 100 companies cancelled their dividends during the Covid-19 crisis of spring 2020. But M&G’s board has indicated that it plans to increase the dividend over time, not reduce it.

Then again, M&G faces stiff competition from far larger competitors, including several US giants. Also, low-cost index-tracking funds keep eroding asset managers’ fees. Despite these headwinds, I still regard M&G as one of my top cheap shares for 2022. That’s why my family portfolio will be buying this FTSE 100 stock to hold for many years to come!

Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has recommended Prudential. 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.

The volatility in global stock markets over 2022 so far is enough to shake the conviction of even the most grounded of investors. Here are a few strategies I’ve been using to ride out the storm.

1. Don’t panic-sell

When the chips are down, it’s easy to see why moving into cash is so appealing. It draws a line under the situation and allows me to move on. But does it really?

Beyond holding an ’emergency fund’ to cover, say, a sudden unexpected bill or brief period of unemployment, cash is just about the worst asset I could have right now. Low interest rates and galloping inflation means its value is gradually (or not so gradually!) being eroded. So in addition to crystallising any losses, I’d essentially be jumping out of the frying pan into the fire.

Selling up also implies that I also know when will be the right time to buy stocks again. The sheer volatility we saw on markets last week, where share prices actually rose as the Russian invasion of Ukraine progressed, tells me I don’t.

As a committed Fool, it goes without saying that panic-selling everything I own right now is not something I’m contemplating. 

2. Buy quality

Warren Buffett tells us to “be greedy when others are fearful“. I’d say right now offers me a great opportunity to put this advice into practice.

Now, it doesn’t make sense to buy any old stock on the market and expect it to recover in style. I would, for example, avoid any company lacking financial stability (such as cinema chain Cineworld). I would also steer clear of any business that lacks an identifiable advantage over competitors (such as white goods seller AO World, in my opinion). Instead, I’d be out to snap up proven ‘winners’ in their respective sectors. From the FTSE 100, for example, I remain convinced that Halma is a great growth buy. 

Aside from looking for quality businesses, there are also ways of making the buying process easier from a psychological point of view. One is buying in tranches, otherwise known as pound-cost averaging. Such a strategy helps to avoid trying to time the market exactly (which I know I can’t do, at least consistently). It also ensures at least some of my money starts working for me. 

A third element of my buying strategy is to make sure that anything I snap up is held within a Stocks and Shares ISA. This means any profits I make (and dividends I receive) are free of tax. 

3. Switch off

Assuming I’ve not sold anything in haste and bought things I’ve had on my watchlist, there’s one final solution that’s unsurpassed in helping me deal with stock market volatility. Simply, just switch off. That’s right — close off my portfolio, turn off the laptop, stop watching the news and go and do something more productive.

I have the confidence to do this because evidence shows that equities outperform all other asset classes. This includes cash (naturally), bonds, real estate and gold. The only caveat here is that this requires being invested for the long term.

For someone content to grow his wealth slowly but surely, that suits me. As distressing as current events are, I also know that “this too shall pass“. 

Paul Summers has no position in any of the shares 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.

Stock markets continue to move around sharply, and I believe that will continue for some time. A stock market sell-off is an inevitable phenomenon from time to time. I think it is helpful for an investor to have tools to manage such a sell-off to their advantage where possible.

Here are five practical steps I would consider taking in such times.

1. Think for the long term

If a move does not make sense for me as an investor looking at the long term, can it make sense in the short term? The more I focus on short-term opportunities instead of long-term investment cases, the more I become a speculator not an investor.

I think this is always true – but it can be hard to remember during a stock market sell-off. Yet bad decisions I make hastily could set me back by years in building my portfolio.

2. Ignore temptations to bend one’s own rules

The reason I think it is worth developing some investment principles when the market is calm is because one can think clearly then. Applying that approach can bring clarity into an otherwise confusing situation when the market stumbles.

Often a stock market sell-off throws up unusual but tempting situations. Last week, for example, the soaring prospective yield of Evraz as its share price plunged was really attractive to me. But the company does not fit my investment criteria, so even at a more attractive price, it would still be a bad fit for my portfolio. In such situations, sticking to one’s own investment principles can be difficult — but it makes it easier to handle a volatile market in a way that matches one’s own long-term investment goals.

3. Stay diversified

Diversification is an important risk management tool. It allows investors to reduce the risk to their portfolios if a share they own suddenly faces unexpected challenges. Even if I am investing just a few hundred pounds, I can diversify my shareholding across different companies. A stock market dip can hurt most shares, but often some sectors suffer worse than others. That should hopefully affect my overall portfolio less if it is properly diversified.

4. Prioritise facts over emotion

Market volatility – which can coincide with wider political or social volatility – can make for a very emotional time. Other market participants can start talking in dramatic terms, which may affect me emotionally as an investor.

So I find it helpful to focus on facts first and foremost. For example, if someone says “the market for this company will never come back” or “we’ll never see a buying opportunity like this again”, I look at the data. Imagine I do not want to buy a company because it lacks a sustainable competitive advantage, for example. The mere fact of a sudden share price plunge does not change the company’s lack of a competitive advantage.

5. Keeping perspective

Warren Buffett talks about not owning shares that cost him sleep. If a stock market sell-off causes one real stress or financial worry, it could mean it is time to reassess one’s portfolio and investment strategy.

I would build and manage my portfolio in a way that worrying about it does not interfere with daily life. Investing is about building long-term financial security, but not at the expense of my short-term wellbeing.

Christopher Ruane 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.

It’s no secret that over the last few years the crypto-economy has experienced major expansion. For example, total crypto market capitalisation in 2018 was $123bn, whereas last year it was over $2trn. However, since its IPO in April last year, US-based exchange Coinbase (NASDAQ: COIN) has struggled, with its share price down nearly 50% since.

After the recent release of its Q4 and full-year results, the stock initially soared. Yet, investors sold off the spike, bringing the price back down.

With the stock down 7% in the last five days, this begs the question should I be buying Coinbase shares today? Let’s take a look.

Q4 results

Let’s start by looking at the Q4 earnings the firm released last week. In the three months ending 31 December 2021, Coinbase generated $2.5bn in revenue, up from the $585m in the same period of the previous year. On top of this, net income rose from $177m in Q4 2020 to $840m in Q4 2021, representing a staggering 375% increase. Trading volume also increased quarter-on-quarter, from $89bn to $547bn, a massive 514% rise.

These figures represent a small proportion of what was an impressive set of results. As a potential investor, these are positive signs.

So, why is the share price down?

If the firm posted such strong Q4 and full-year results, then why have investors rushed to offload their holdings?

Well, this is mainly due to Coinbase’s comments regarding Q1 2022 projections, which look set to fall short of expectations. This is primarily seen through total trading volume, which was $200bn at the time of the release. This has Coinbase on track to widely miss the mark when compared to last quarter. However, Coinbase mentioned how historically “all-time high periods have been followed by softer periods”. As a long-term investor, short periods of volatility are of no concern to me. Instead, I see Coinbase shares as an attractive potential addition to my portfolio.

Coinbase NFT marketplace

What also excites me is the launch of its non-fungible token (NFT) platform. The use of NFTs has grown massively over the past 12 months, with NFT sales reaching nearly $20bn in 2021. This was up from less than $100m in 2020. And over 3m people have already signed up for the waiting list. Further, Coinbase’s NFT marketplace will allow users to buy NFTs without crypto. This, along with its brand recognition, could give it an edge over competitors such as OpenSea when attracting a wider audience.

Would I buy?

So, will I be buying Coinbase shares? Well, despite the projected slow start to the year, I think 2022 could be a strong year for Coinbase. According to a recent study, nearly one in four US households own crypto – and I think in 2022 we will see this increase. The launch of its NFT marketplace is an exciting prospect, and I think that should its launch be successful, it will boost the firm’s future performance. Currently trading for $176, I would be willing to add the stock to my portfolio.

The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which carry several risks, including the total loss of any monies invested. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Coinbase Global, Inc. 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.