There are plenty of cheap stocks now that the market has corrected. Some of these are value traps, which means they’re deceptively cheap. However, others are temporarily cheap. These high-flying stocks rarely offer a bargain, which means their current valuations are a rare opportunity.
Here are the top three cheap stocks that won’t be cheap for too long.
Cheap stock #1
Lightspeed Commerce (TSX: LSPD)(NYSE: LSPD) is an obvious pick for this list. The stock was unbelievably expensive for the past few years. Then, in 2020, it went supersonic. At one point, the stock was trading at a price-to-sales ratio of 50!
Now, the story has changed. Lightspeed stock has dipped 60% from its all-time high. Meanwhile, revenue has surged after a successful pivot to e-commerce. That means the stock now trades at a price-to-sales ratio of 14.5.
This is the definition of a cheap stock that won’t be cheap for too long. The price may take a while to crawl back to its all-time high, but the current rate is simply too low. This is likely to be temporary.
Cheap stock #2
Galaxy Digital Holdings (TSX: GLXY) is another temporarily beaten-down stock. It’s down 36% from its all-time high. Meanwhile, Bitcoin is down 25% from its all-time high. In other words, GLXY is closely correlated with the crypto market cycle.
The crypto market is remarkably volatile, but its long-term trend is upwards. This is why you can’t expect to buy Bitcoin for $300 ever again. It’s also why Galaxy Digital’s undervaluation is temporary. The stock should rebound strongly in the months ahead.
At the moment, Galaxy Digital stock trades at just $26.2. The price-to-earnings ratio is an unbelievable 5.85. The company also has roughly $2 billion in digital assets (cryptocurrencies) on its balance sheet. Meanwhile, its market cap is $5.84 billion. This implies that 34% of each share is backed by digital assets on the book.
Galaxy Digital is a cheap stock that could look a lot cheaper if the crypto market rebounds.
Cheap stock #3
HIVE Blockchain Technologies (TSX: HIVE)(NASDAQ:HVBT) is yet another deceptively cheap stock. The company is a Bitcoin and Ethereum miner, which gives it more upside than most pure-play BTC miners.
According to its latest corporate statement, the firm has 1,584 Bitcoin on its books. That’s worth roughly $100 million at BTC’s current market price. The company also claims to be on track for $350 million in annual revenue on a run rate basis. Meanwhile, HIVE Blockchain’s market cap is just shy of $1.6 billion.
In other words, HIVE stock is trading at 4.6 times annual revenue, or 16 times the value of its digital assets. That’s a reasonable valuation in a sector that’s notorious for being overpriced. Keep this cheap stock on your watch list.
