Crypto companies are likely to report robust growth and cash flows in the next bull market
In the last bull market, movement in some of the best crypto stocks was nothing less than the rally in digital assets. While crypto stocks have a high-beta, exposure at the right time can translate into quick multi-bagger returns.
Several crypto stocks skyrocketed in the first half of 2023 with the surge in Bitcoin (BTC-USD) from oversold levels. Even after the recent correction, the digital asset is higher by 56% year-to-date. I expect a renewed rally for Bitcoin after some consolidation in the broad range of $25,000 to $30,000.
With fundamentally strong crypto stocks correcting from year highs, it seems like a good opportunity to accumulate. Bitcoin halving is due in 2024 and the digital asset is likely to rally post the halving event. Standard Chartered is expect Bitcoin to trade at $120,000 by the end of 2024. If this holds true, some of the best crypto stocks are poised for multi-bagger returns within the next 18 months.
Let’s discuss the fundamentally strong crypto stocks to buy at current levels.
Riot Platforms (NASDAQ:RIOT) is among the best Bitcoin mining stocks to buy. After a sharp correction of 40% in the last one month, the stock looks attractive for fresh exposure.
One reason to like Riot is a strong balance sheet. As of Q2 2023, the company reported zero debt and $510 million in cash and digital assets. This provides Riot with high financial flexibility for aggressive expansion.
It’s worth noting that the company ended Q2 2023 with mining capacity of 10.7EH/s. On a year-on-year basis, capacity increased by 143%. However, the best part of capacity growth is due. With the June agreement to purchase miners, Riot expects to boost capacity to 20.1EH/s by mid-2024. Further, if the company exercises the option to buy additional miners, capacity will swell to 35.4EH/s by the end of next year.
The company is clearly positioned for robust revenue growth and cash flow upside. The massive growth in capacity will more than offset the concerns related to difficulty in Bitcoin mining after the halving event.
After a memorable listing during the euphoric rally of 2021, Coinbase (NASDAQ:COIN) stock was trending lower on a consistent basis. However, the recovery in Bitcoin has triggered a massive rally of 117% year-to-date in COIN stock.
I believe that Coinbase will be positioned for robust growth in the next bull market. One reason is the company’s focus on aggressive expansion. In March, the company had announced an 8-week expansion drive in six continents.
Additionally, Coinbase recently received approval to bring federally regulated crypto futures for U.S. customers. Expansion of service offering to retail as well as institutional customers is another reason to be positive.
I also like the fact that Coinbase has a strong cash buffer of $5.5 billion. This provides flexibility to invest in platform innovation and pursue global expansion. Of course, the markets are far from the trading frenzy witnessed in 2021. However, that’s likely in 2024 if Bitcoin surges higher.
I would hold a crypto penny stock in the portfolio for potential multi-bagger returns if Bitcoin skyrockets in 2024, and Bitfarms (NASDAQ:BITF) stock looks attractive at current levels of $1.34. I believe that 5x or 10x returns are likely in the next 18 months if Bitcoin trades at new highs.
Being a small company, Bitfarms has robust fundamentals. As of July, Bitfarms reported debt obligations of $13.7 million. The company has already deleveraged significantly and further plans to be debt free by February 2024. Further, with a liquidity buffer of $48 million, there is ample flexibility for aggressive growth.
It’s also worth noting that Bitfarms has mining capacity of 5.3EH/s as of July. On a year-on-year basis, capacity expansion has been robust and I expect that to sustain. Further, with the company having an attractive breakeven cost, I expect robust cash flows once Bitcoin surges.
On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On Low-Capitalization and Low-Volume Cryptocurrencies: InvestorPlace does not regularly publish commentary about cryptocurrencies that have a market capitalization less than $100 million or trade with volume less than $100,000 each day. That’s because these “penny cryptos” are frequently the playground for scam artists and market manipulators. When we do publish commentary on a low-volume crypto that may be affected by our commentary, we ask that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: How to Avoid Popular Cryptocurrency Scams
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.
Article printed from InvestorPlace Media, https://investorplace.com/2023/08/3-crypto-stocks-to-buy-for-100-gains-as-bitcoin-stabilizes/.
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