1 Blockchain Stock to Avoid in 2020 and 1 Tech Stock That Is an Absolute Buy

The HUT 8 stock and Absolute Software stock belong to industries of the future. However, the business direction of the former is not as certain as the latter. The cybersecurity company is proving its worth, while the Bitcoin-mining giant is dealing with internal issues.

| More on:
Diagonal chain made of zeros and ones. Cryptocurrency and mining.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn moresdf

Something is cooking inside HUT 8 (TSX:HUT) that’s eliciting curiosity among investors of the Bitcoin-mining giant. Blockchain stocks like Hut 8 are bruited as the next best thing to investing in Bitcoin. However, the stock is losing ground.

Meanwhile, Absolute Software (TSX:ABT) is cementing its position as the leader in endpoint resilience. The company is displaying strength in the Enterprise market and reporting strong profitability across the business. Between the two stocks, Absolute is showing growth potentials, while Hut 8 is puzzling investors.

Conspiracy theory

HUT 8 is looking for a new CEO to replace Andrew Kiguel, who is also the company co-founder. Aside from the stepping down news, HUT 8’s board is ending the company’s exclusivity deal with Bitfury in North America. Bitfury is the full-service blockchain firm that provides the Bitcoin-mining hardware.

No one knows exactly what’s happening behind the scenes. But it appears that by letting go of Kiguel, HUT 8 could save at least $2 million annually. The co-founder’s yearly compensation is about $3 million. He is also seen as the last obstacle in concluding the exclusivity deal with Bitfury.

Interestingly, the majority of the board members are Bitfury members or associates. Likewise, Bitfury owns about 47% of HUT 8’s common stock. The move is sending the wrong signal. But Bitfury may be preparing to take over the wheels, which is beneficial in the long term. Still, a conspiracy lingers.

Remarkable enterprise growth

The opposite is happening in Absolute. You can see double-digit enterprise growth. “During Q2 we hit a significant milestone during its Q2 fiscal 2020. The annual contract value base is now more than $100 million,” said CEO Christy Wyatt.

While there are also leadership changes at the top, Absolute is forming a seasoned management team that will help drive business growth. Total revenue is already increasing by 6%. In 2020, analysts are forecasting revenues to be around US$104.4 million. Business growth should be meaningful in the coming years.

The number of well-known firms, some of which are Fortune 500 companies, are entrusting their internal security controls to Absolute Software. There are about 40 Absolute applications available for use by remote digital workforces.

IT organizations can enforce asset management, security hygiene, and data compliance better than before. Absolute Software is expanding the ecosystem of security control and applications.

Absolute choice

Cybersecurity is growing in importance because cyberattacks are becoming prevalent in the increasingly connected world. Absolute Software is offering a platform that can detect, monitor, manage, and prevent cyberattacks.

However, blockchain technology is the future. The technology can create an economic infrastructure that suits the digital economy. The prediction is that the blockchain market could be worth US$60 billion by 2024.

Absolute has a clearer path to profitability today. The situation at HUT 8 smells like a takeover. Unless there is full disclosure of the inside maneuvers, investors will remain skeptical about investing. If you want to take a position, you know which stock is the absolute buy.

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 Christopher Liew has no position in any of the stocks mentioned.

More on Tech Stocks

A worker uses a double monitor computer screen in an office.
Tech Stocks

Why Shopify Stock Sold Off Last Week

Shopify (TSX:SHOP) sold off heavily last week. A bad earnings release may have been the culprit.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Tech Stocks

2 Phenomenal Growth Stocks Down 30-60% That Could Rally in the Next Bull Market

Is it time to buy growth stocks? The worst of the interest rate hike and inflation is over, and now…

Read more »

stock market
Tech Stocks

2 Best Tech Stocks to Buy Before the Next Bull Market

Tech stocks such as Roku and Nuvei can help long-term investors generate outsized gains in 2023 and beyond.

Read more »

Wireless technology
Tech Stocks

Tucows Stock Trades Near its 6-Year Low: Is it a Buy?  

Tucows stock fell 63% in the tech stock sell-off and has failed to show any recovery. Is this domain and…

Read more »

Male IT Specialist Holds Laptop and Discusses Work with Female Server Technician. They're Standing in Data Center, Rack Server Cabinet with Cloud Server Icon and Visualization
Tech Stocks

Is Converge Stock a Buy?

A relatively new tech stock could soar higher with the pause in rate hikes, although a resumption of the cycle…

Read more »

online shopping
Tech Stocks

Up by 25%: Is Shopify Stock Finally a Buy in 2023?

The strong rebound in the TSX’s top tech stock remains uncertain. Investors will have to wait before it delivers stellar…

Read more »

Businessman holding AI cloud
Tech Stocks

2 TSX Tech Stocks Innovating Hard in AI

Shopify (TSX:SHOP) stock and another intriguing Canadian gem make good use of AI technologies.

Read more »

worry concern
Tech Stocks

Shopify Stock: Incredible Bargain or Deceptive Trap?

Shopify has quickly shifted from a market darling to something else. Is it a safe buy or risqué bet?

Read more »