The Motley Fool

Top Tech Stock 2021: Hive Blockchain (TSX:HIVE) or WELL Health (TSX:WELL)?

Image source: Getty Images

Tech stocks have had an incredible run over the past year. Two of the best-performing stocks on the Canadian stock market were both from the most exciting technology industries of the year. Hive Blockchain Technologies (TSXV:HIVE) and WELL Health Technologies (TSX:WELL) should both be on your radar for 2021. 

But which one is better? Here’s a closer look at the prospects of these two industries and why I’m betting on one over the other. 

Hive stock

Over the past 12 months, HIVE stock is up a jaw-dropping 2,245%. In other words, a $1,000 investment in HIVE stock in January last year would be worth $23,450 today! 

That incredible performance has been driven, of course, by the revival of Bitcoin. Interest in cryptocurrencies has surged past the previous high set in 2017. Now major cryptocurrencies like Bitcoin and Ethereum are both trading at all-time highs. 

As a Bitcoin miner, HIVE holds these currencies in reserve and generates more every day. Investors are betting on it as a proxy to Bitcoin. However, Hive stock’s valuation has clearly overshot its fundamentals. The stock is trading at a ludicrous 254 times crypto reserves

Meanwhile, the rapidly accelerating price of Bitcoin is making mining more competitive. Minted new Bitcoin is as difficult as ever. That could squeeze HIVE’s margins going forward.  

Well health stock

The telehealth sector, meanwhile, is less competitive, larger, and better valued. WELL Health stock is up 344.6% over the past 12 months. However, sales growth has kept pace with the stock price. Revenue run rate expanded 92% compared to the previous quarter alone. 

Over the past 12 months, WELL Health’s sales growth has been nearly as remarkable as its stock price acceleration. The company’s entry into the United States expands its potential market much further. 

WELL Health stock is currently trading at 13 times its annual revenue run rate. That’s surprisingly reasonable when compared to the rest of the tech sector. HIVE stock, for instance, is trading at a price-to-sales ratio of 35.7. 

At this stage of the market cycle, valuation is key. A stock that is more fairly valued could be at lower risk of a correction if (or when) the tech bubble bursts. This is why I prefer WELL health over HIVE at the moment.

Bottom line

Tech investors have had an incredible run over the past year. However, investors must be cautious, as valuations skyrocket to all-time highs. A correction in the tech sector cannot be ruled out.

Well Health and Hive Blockchain are two of the best-performing stocks over the past year. However, one of these seems far more overvalued than the other at the moment. While HIVE is trading at 254 times crypto reserves, WELL health stock is trading at a modest 13 times recurring revenue.

A fairer valuation makes WELL Health stock my top pick for 2021.

Looking for another intense growth stock? Here's a pick.

This Tiny TSX Stock Could Be the Next Shopify

One little-known Canadian IPO has doubled in value in a matter of months, and renowned Canadian stock picker Iain Butler sees a potential millionaire-maker in waiting...
Because he thinks this fast-growing company looks a lot like Shopify, a stock Iain officially recommended 3 years ago - before it skyrocketed by 1,211%!
Iain and his team just published a detailed report on this tiny TSX stock. Find out how you can access the NEXT Shopify today!

Click here to discover how!

Fool contributor Vishesh Raisinghani owns shares of WELL.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.