Alert: These 2 Tech Stocks Are Heavily Discounted

Tech stocks like WELL Health Technologies (TSX:WELL) are severely undervalued.

| More on:
analyze data

Image source: Getty Images

Legendary investor Leon Cooperman once said that the best way to invest was to “buy straw hats during winter.” In other words, investors are supposed to look beyond current events and make bets based on anticipated outcomes. That often means taking a contrarian position. 

In 2022, perhaps the most contrarian bet is technology. Tech stocks have been severely battered over the past few months. Investors now expect higher interest rates, lower liquidity, and prolonged inflation. None of these are good news for tech stocks. 

However, I would argue that much of this bad news is already priced into the stock market. This could be an ideal time to hunt for discounts. With that in mind, here are the top three tech stocks that I believe are heavily discounted in 2022. 

Discounted tech stock #1

WELL Health Technologies (TSX:WELL) was a Bay Street favourite during the pandemic. The stock surged 553% from early 2020 to early 2021. Since then, it has lost over half its value along with the rest of the small-cap tech sector. 

Investors remain cautious about the tech sector, which could be the primary reason for this dip. Another reason could be the fact that WELL Health was considered a pandemic play and now the reopening is pushing its market value lower. However, I believe telehealth is a long-term trend, and WELL Health is in fundamentally good shape to capitalize on it. 

Recent acquisitions and expansion into the U.S. have pushed WELL Health’s annual revenue run rate to $450 million. Meanwhile, the company’s market value is roughly $860 million at the time of writing. In other words, WELL Health stock is trading at a forward price-to-sales ratio of just 1.9. That’s the sort of valuation you’d expect of a boring oil and gas stock — not a medical tech firm growing at 100% or more. 

In fact, the company is actively buying back its own shares. That’s another indication that it is severely undervalued

Discounted tech stock #2

It isn’t surprising that a downturn in cryptocurrencies has dragged Banxa Holdings (TSXV:BNXA) down, too. The digital asset payments processor has lost roughly 70% of its value since last year. Bitcoin and Ethereum are down 42% and 45%, respectively, over the same period. 

However, Banxa’s underlying business is less exposed to the value of cryptocurrencies than the transaction volume. In other words, the company collects fees on every fiat-to-crypto conversion, which means their top line is based on the value and volume of aggregate transactions. The “buy-the-dip” mentality could be offsetting some of the lost value in this sector. 

Even if you assume that cryptocurrencies are past their peak and trading volume will remain subdued for several years, Banxa stock is still undervalued. The company is worth just over $100 million, while global crypto transactions are still at US$73.9 billion (CA$94.66 million) every day. 

Put simply, Banxa stock is simply too pessimistic given the growth potential and cyclicality of the crypto sector. This underrated tech stock should be on your radar as a contrarian bet. 

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 Banxa Holdings Inc., Bitcoin, Ethereum, and WELL Health Technologies Corp. The Motley Fool owns and recommends Bitcoin and Ethereum.

More on Tech Stocks

investment research
Tech Stocks

Is OpenText Stock a Buy, Sell, or Hold for 2025?

Is OpenText stock poised for a 2025 comeback? AI ambitions, a 3.8% yield, and cash flow power make it a…

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Emerging Canadian AI Companies With Big Potential

These tech stocks are paving the way to an AI-filled future, but still offer enough growth ahead for a strong…

Read more »

Young Boy with Jet Pack Dreams of Flying
Tech Stocks

Is Constellation Software Stock a Buy, Sell, or Hold for 2025?

CSU stock has long been a strong option for high growth, high value stocks. But are there now too many…

Read more »

An investor uses a tablet
Tech Stocks

Canadian Tech Stocks to Buy Now for Future Gains

Not all tech stocks are created equal. In fact, these three are valuable options every investor should consider.

Read more »

dividend growth for passive income
Tech Stocks

2 Rapidly Growing Canadian Tech Stocks With Lots More Potential

Celestica (TSX:CLS) and Constellation Software (TSX:CSU) are Canadian tech darlings worth watching in the new year.

Read more »

BCE stock
Tech Stocks

10% Yield: Is BCE Stock a Good Buy?

The yield is bigger than it's ever been in the company's history. That might not be a good thing.

Read more »

Happy shoppers look at a cellphone.
Tech Stocks

So You Own Shopify Stock: Is it Still a Good Investment?

Shopify (TSX:SHOP) stock has had a run, but there's still room to the upside.

Read more »

A person uses and AI chat bot
Tech Stocks

AI Where No One’s Looking: Seize Growth in These Canadian Stocks Before the Market Catches Up

Beyond flashy headlines about generative AI, these two Canadian AI stocks could deliver strong returns for investors who are willing…

Read more »