Buy These 4 Stocks to Profit From Bitcoin's Soaring Popularity

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Bitcoin is one of the most popular cyrptocurrencies on the market, primarily backed by a rising user base. According to , the market capitalization of the currency presently stands at more than $124.5 billion, much higher than the stock market valuation of both Goldman Sachs, Inc. GS and Morgan Stanley MS , which sit at $94.6 billion and $91.9 billion, respectively.

Also, on a year-to-date basis, bitcoin has outclassed the S&P 500 index. From $963.66 on Jan 1, the price of bitcoin has risen more than 600% against only 15.7% for the S&P 500. Thus, it is the right time for investors to add stocks that have a positive correlation with the virtual currency.

Record Customers Open Bitcoin Accounts

The virtual currency market has witnessed a record number of accounts for bitcoin traders after CME Group Inc. (CME) - the operator of the largest options and futures exchange in the world - announced its intention to introduce bitcoin futures by the end of the October-to-December quarter of 2017.

Coinbase - the United States' largest bitcoin exchange - has roughly 100,000 new users willing to buy or sell the digital currency, per Alistair Milne . Coinbase added that as of now, it has as many as 11.9 million users. Also, CME Group's plan to launch bitcoin futures pushed the virtual currency to its highest mark of $7,454.04 on Nov 3.

Mining Demand Rises

With an increasing number of bitcoin buyers and sellers, we are expecting more transactions that will need more mining. Transactions refer to transferring value between the customer's bitcoin wallets, while mining specifies the process through which all the transactions will get verified and processed.

Investors should know that bitcoin is not a physical coin, and no central authority creates the virtual currency. Instead, computers create bitcoin through mining. A special software is being used by the miners for solving critical mathematical problems and thereby keeping the bitcoin network secure by verifying payments. In exchange, the miners receive a small amount of the digital currencies as rewards. That is how bitcoin operates.

Which Stocks Will Benefit?

New businesses associated to mining have emerged and companies offering digital mining equipment are in high demand. Miners require advanced hardware to solve more complex problems. Hence, the need for computer processors and chips used by miners for creating bitcoin have surged.

Companies producing these chips are now in high demand, and investing in such stocks will be a smart option. Four stocks in particular are poised to gain the most on the bitcoin price surge, per Bloomberg. All the stocks also carry a solid Zacks Rank. You can see the complete list of today's Zacks #1 Rank stocks here .

Headquartered in Sunnyvale, CA, Advanced Micro Devices, Inc.AMD primarily provides microprocessors (x86-based), chipsets, discrete graphics processing units (GPUs) and professional graphics. Notably, the miners of digital currencies are increasingly using GPU.

The company carries a Zacks Rank #2 (Buy) and posted an average positive earnings surprise of 31.67% for the last four quarters.

NVIDIA CorporationNVDA , headquartered in Santa Clara, CA, is a worldwide leader in visual computing technologies and the inventor of GPU, which is a high-performance processor generating realistic, interactive graphics on workstations, personal computers, game consoles and mobile devices.

The company sports a Zacks Rank #1 (Strong Buy). NVIDIA surpassed the Zacks Consensus Estimate for earnings in each of the prior four quarters with an average positive earnings surprise of 34.54%.

Micron Technology, Inc.MU , headquartered in Boise, ID, has established itself as one of the world's leading providers of semiconductor memory solutions, including manufacturing memory chips. The memory chips, among the most important parts of mining rig, will be useful for miners said Stifel Nicolaus, an investment banking firm.

The #1 ranked stock also has an excellent earnings surprise history. Micron beat the Zacks Consensus Estimate of earnings in the last four quarters, the average positive earnings surprise being 10.98%.

Based in Santa Clara, CA, Intel CorporationINTC is the world's largest manufacturer of semiconductor products. The company's innovative efforts are speeding up the entire computer, and not just the central processing unit (CPU), which is helpful for the miners. In fact, Stifel Nicolaus believes that the processors of Intel will be highly useful for mining the digital currency.

The Zacks #1 Ranked stock has surpassed the Zacks Consensus Estimate in all the prior four quarters, posting an average beat of 9.75%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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