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

WELL Health Technologies (TSX:WELL) seems more fairly valued than HIVE Blockchain Technologies (TSX:HIVE).

| More on:

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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Vishesh Raisinghani owns shares of WELL.

More on Tech Stocks

GettyImages-1352607170 (1)
Tech Stocks

Why Shopify Stock Is Skyrocketing Today

Shopify published its Q3 report this morning, and it gave investors plenty to be excited about.

Read more »

young people stare at smartphones
Tech Stocks

Here Are My Top 3 Tech Stocks to Buy Now

Given their strong performances and healthy growth prospects, I expect these three tech stocks to deliver superior returns over the…

Read more »

artificial intelligence AI data deep processing
Tech Stocks

Top 3 Canadian AI Stocks to Watch This Year

When there is as much hype about a specific type of stock (like AI stocks), it's a good idea to…

Read more »

ETF stands for Exchange Traded Fund
Tech Stocks

The Best Tech ETF to Invest $1,000 in Right Now

An ETF can be a solid option for any type of investing. But with tech stocks having a lot of…

Read more »

how to save money
Tech Stocks

Should You Buy Shopify Stock Hand Over Fist Before November 12?

Here are the top reasons why you may want to consider buying Shopify stock before its upcoming earnings event.

Read more »

stocks climbing green bull market
Tech Stocks

Why Propel Stock Keeps Going Up

Propel stock has seen a fivefold increase in its market cap in the last year! But even more is set…

Read more »

a-developer-typing-lines-of-ai-code-while-viewing-multiple-computer-monitors
Tech Stocks

Could Constellation Software Become the Next Berkshire Hathaway?

Constellation Software's (TSX:CSU) capital-allocation strategy is similar to that of Berkshire Hathaway (NYSE:BRK.B).

Read more »

cloud computing
Tech Stocks

3 No-Brainer Tech Stocks to Buy With $1,000 Right Now

These three Canadian tech stocks could be among the best growth opportunities in the market right now.

Read more »