2022 hasn’t been a great year for tech stocks. With rising inflation and interest rates, the path ahead looks even more precarious. However, this dip seems to have surfaced some interesting opportunities.
Here are the top two tech stocks I believe could rebound sharply in 2022.
Tech stock #1
Bitfarms (TSXV:BITF)(NASDAQ:BITF) is an interesting opportunity. The stock is down 40% year to date and down by more than 60% from all-time highs registered in November.
Amid the correction, Bitfarms is one of the companies well positioned to bounce once the Bitcoin price resumes the uptrend. It is important to note that this company relies heavily on Bitcoin prices from which it generates most of its revenues.
Bitfarms stands out from the other players in the sector, given its balance sheet is healthy. As of the end of September, the company had more than $43 million in cash and $101 million worth of digital assets. In addition, the company has over 4,600 BTC in custody, having purchased 1,000 BTC in January.
Based on a BTC price of about $38,000, the company’s holdings totaled $175 million as of the end of January. While Bitcoin has shed significant value amid the ongoing correction lower, there is no doubt that the holdings will be worth more once the price increases in the future.
Bitfarms’s production costs dropped to $6,900 from $9,000. Being a low-cost producer, the company should perform better than its peers once Bitcoin prices bounce back. Trading at a price-to-earnings multiple of 10, the stock seems undervalued considering Bitcoin’s resilience.
Tech stock #2
Bitcoin’s strength benefits another crypto miner: Hut 8 Mining (TSXV:HUT)(NASDAQ:HUT).
A 65% pullback from all-time highs has made this stock more intriguing. In recent months, the risk-off mood has fueled the selloff in capital markets. However, Bitcoin’s value seems to be holding up well, which is excellent for this miner’s gross margins.
Bitcoin is up 16% from the previous week and is trading at the same level it was in mid-2021. That means Hut 8’s mining margins have been far more stable and robust than anticipated. The fact that the stock price has dropped creates a potential opportunity.
There is no doubt that the dust will settle, HUT 8 could bounce back. The company remains well positioned to be one of the beneficiaries of the overall cryptocurrency market, bouncing back from the deep selloff
The mining company focused on Bitcoin blockchain and Web 3 boasts of one of the most diversified mining equipment fleets. It currently operates one of the biggest Bitcoin mining operations made up of five data centres in Canada and 400 commercial enterprise customers
Once Bitcoin starts climbing, Hut 8 Mining should also climb, as it stands to make more money from its mining operations. The stock is currently trading at a discount with a price-to-earnings multiple of 13, which makes a bounce back possible.
