The crypto market is reaching new heights as coins and tokens provide multi-fold returns in the blink of an eye. And while global adoption of cryptocurrencies has increased, data suggests these users comprise only 4% of the world’s population. This leaves ample headroom for growth in all aspects of the industry, including crypto stocks.
In the last 12 to 18 months, several cryptocurrency-related trades have delivered multi-fold returns. Looking ahead, crypto stocks are positioned for further upside with strong revenue and cash flow growth visibility.
Further, as crypto and the tech behind it gain use cases, there is ample scope for diversification with related companies and industries, like financial technology (fintech).
Let’s take a deeper dive into four crypto stocks that look positioned to rally in the coming quarters:
- Hut 8 Mining (NASDAQ:HUT)
- Argo Blockchain (NASDAQ:ARBK)
- Marathon Digital (NASDAQ:MARA)
- Hive Blockchain (NASDAQ:HIVE)
Crypto Stocks: Hut 8 Mining (HUT)
HUT stock has already surged by more than 300% year-to-date. I believe that the momentum is likely to sustain considering the company’s growth plans and the bullish outlook for cryptocurrencies.
As an overview, Hut 8 is a Bitcoin (CCC:BTC-USD) mining company and has a total power capacity of 109 megawatts (MW). Its power capacity is expected to rise to 144 MW by the end of 2021 and further increase next year. This is likely to translate into strong growth in the number of Bitcoins mined per day.
It’s also worth noting that Hut 8 has robust financial flexibility. As of June, the company reported a cash position of $92.7 million. Furthermore, as of August, the company was holding 4,240 Bitcoins. At the time, its crypto holdings had a market value of more than $245 million.
With more than $300 million in liquidity buffer, Hut 8 is positioned for sustained growth and potential diversification. For example, the company has already diversified to Ethereum (CCC:ETH-USD) mining.
Another point to note is that the company reported adjusted EBITDA of $30.6 million for the first half of 2021. For the prior year comparable period, the company reported an EBITDA level loss. With scale-up in operations and a higher Bitcoin price, key margins are likely to remain robust. These factors make HUT stock an appealing way to gain crypto exposure.
Argo Blockchain (ARBK)
ARBK stock is another attractive name among crypto stocks. Like most Bitcoin mining companies, Argo Blockchain has been aggressively expanding its mining capacity.
By the fourth quarter of 2021, the company expects mining capacity to reach 1.7 ex-hash per second (EH/s). Looking further ahead, that number should increase to 3.7 EH/s by Q3 2022. As capacity more than doubles, Argo is positioned for strong growth coupled with cash flow upside.
It’s also worth noting that as of September, the company owned 1,836 Bitcoin. At Bitcoin’s current price level around $62,000, the value of Argo’s holdings is about $113 million.
Additionally, Argo recently closed its initial public offering for gross proceeds of $112.5 million. Therefore, there is ample financial flexibility to pursue growth.
Another point worth noting is that for last month, the company reported a Bitcoin equivalent margin of 84%. It seems likely that will sustain in the coming quarters and further boost the company’s cash position.
ARBK stock is a relatively new listing on the Nasdaq exchange. The stock looks attractive at a current market capitalization of $799 million. Considering the coming growth in its ex-hash capacity, Argo Blockchain is positioned for revenue and cash flow upside.
Crypto Stocks: Marathon Digital (MARA)
MARA stock has skyrocketed by more than 1,700% in the last 12 months. This should not come as a surprise with the company having ambitious growth plans.
To put things into perspective, the company had a hash rate of .18 EH/s as of January 2021. Marathon Digital expects capacity to increase to 13.3 EH/s by mid-2022. Clearly, with strong growth in mining operations, MARA stock looks attractive.
It’s worth noting that for Q1 2021, the company mined 192 Bitcoins. The number increased to 654 in Q2 2021. As of June, the company’s hash rate was 2.09 EH/s. Considering its expected capacity growth, Marathon Digital is positioned for a six-fold increase in the number of Bitcoins mined in the next few quarters.
As a matter of fact, Marathon Digital has guided for 2,904 Bitcoins being mined every month after mid-2022. This would imply monthly revenue of about $175 million if Bitcoin trades at $60,000. This will translate to strong growth in liquidity through holdings of digital assets.
Marathon already has $70.9 million in cash and $387.3 million in digital assets. With emerging use cases in the cryptocurrency world, Marathon is positioned to grow and diversify. Overall, MARA stock looks ready for sustained upside.
Hive Blockchain (HIVE)
HIVE stock can deliver multi-fold returns from current levels. The blockchain company reported gross income of $66.7 million in 2021 and on a year-over-year basis, its income increased by 128%.
With the purchase of new miners, the company’s income growth is likely to sustain through 2022. As of October 2021, the company reported Bitcoin mining facility of 1.2 EH/s. Capacity is expected to increase to 2 EH/s by December 2021 and further to 3 EH/s by March 2022.
At the same time, Hive’s Ethereum mining capacity is expected to increase from 4,000 gigahash per second (GH/s) to 6,000 GH/s. Therefore, Hive Blockchain is diversified with income from Bitcoin and Ethereum mining.
Additionally, the company’s partnership in DeFi Technologies (OTCMKTS:DEFTF) also gives exposure to the world of decentralized finance (DeFi). As of June 2021, there was approximately $93 billion in assets locked in DeFi. Therefore, this is likely to be another area of growth for the company in the long term.
Overall, HIVE stock looks appealing as the company expands mining operations and spreads its wings. If sentiments remain bullish for the world of cryptocurrencies, HIVE stock is positioned for a big rally.
On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.