After a big rally in the last few quarters, Bitcoin (BTC-USD) seems to be consolidating. With Bitcoin halving done and with the possibility of multiple rate cuts in the next 12 months, I am bullish on new highs for Bitcoin.
Further, there continues to be good news for the crypto industry. With the approval for Ethereum (ETH-USD) ETF, cryptocurrencies will likely remain in an uptrend. Exposure to quality crypto stocks is one way to benefit from the bull market.
It’s worth mentioning here that chart expert Peter Brandt expects Bitcoin to scale $200,000 before the current bull market ends. Therefore, there is ample scope to make money from Bitcoin, altcoins and crypto stocks.
If the above target for Bitcoin is achieved, some of the best crypto stocks will likely deliver multibagger returns. My focus includes centralized crypto exchange and Bitcoin miners. Let’s, therefore, discuss three crypto stocks to buy with a bullish outlook for Bitcoin and the broader crypto industry.
Coinbase (COIN)
Coinbase (NASDAQ:COIN) has witnessed a massive rally of 300% in the last 12 months. However, the rally has been from deeply oversold levels, and COIN stock remains attractive. COIN stock has been in a consolidation zone in the previous two months, and a forward price-earnings ratio of 33.2 looks attractive. I expect a renewed breakout on the upside if the current rally for Bitcoin sustains.
An important point to note is that Coinbase focused on aggressive international expansion last year. The priority markets include Brazil, Europe, Singapore, Australia and the UAE. Therefore, Coinbase has a bigger addressable customer base in the current bull market. This is likely to translate into robust revenue growth and profitability expansion.
It’s also worth noting that Coinbase has a strong balance sheet. This provides ample flexibility for expansion and platform development. As the financial flexibility improves in the current bull market, Coinbase will be positioned to accelerate revenue diversification. This will support a potential acceleration in revenue growth.
Riot Platforms (RIOT)
Riot Platforms (NASDAQ:RIOT) seems to be trading at a valuation gap among Bitcoin mining stocks. It’s worth noting that RIOT stock has remained sideways in the last 12 months, even as Bitcoin surges. At a forward P/E of 18.9, the stock is a steal.
It’s worth noting that Riot Platforms has ambitious growth plans that are backed by strong fundamentals. As of Q1 2024, the company reported a cash buffer (including Bitcoin holdings) of $1.3 billion. Further, with a zero-debt balance sheet, financial flexibility is high.
Regarding expansion, Riot reported a hash rate capacity of 12.4EH/s as of Q1 2024. By the end of the year, the company is targeting to increase capacity to 31.5EH/s. This is likely to translate into stellar revenue and EBITDA growth.
Riot has also set a target to achieve a Bitcoin mining capacity of 100EH/s by 2027. Healthy growth is, therefore, likely to be sustained in the next few years. I believe it’s just a matter of time before RIOT stock goes ballistic.
Bitfarms (BITF)
Let’s end the discussion on crypto ideas with a penny stock to buy that has multibagger returns potential. Bitfarms (NASDAQ:BITF) has been weak year-to-date, with a correction of 30%.
There are two reasons for the decline, even as Bitcoin trends are higher. First, BITF stock has discounted the relative mining difficulty after the halving event. Further, Bitfarms raised $275 million earlier this year, and equity dilution has impacted stock sentiments. The stock, however, seems to be in a consolidation zone, and I expect a big breakout in the coming quarters.
As of Q1 2024, Bitfarms reported a hash rate capacity of 7EH/s. The company is targeting capacity expansion to 21EH/s by the end of the year. With $124 million in liquidity and a zero-debt balance sheet, Bitfarms has high financial flexibility.
For Q1 2024, Bitfarms reported revenue growth of 67% on a year-on-year basis to $50 million. Adjusted EBITDA surged by 233% for the same period to $21 million. As a low-cost Bitcoin miner, Bitfarms is positioned to deliver robust EBITDA and cash flows in the coming quarters. This will translate into significant price-action.
On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
