With digital technologies increasingly integrating themselves into the real world, investors should target augmented reality stocks to buy. At its core, AR refers to the superimposition of computer-generated images on a user’s view of the world via a device such as a smartphone or a headset.
Augmented reality stocks undergird the innovation that marries the “analog” real world with attributes of digitalization. From quickly finding destination points to critical training for essential services, AR is not just a fanciful toy. In fact, Grand View Research pointed out that the segment can expand at a compound annual growth rate (CAGR) of 40.9% between 2022 and 2030.
At the culmination of this forecasted period, the AR market could command revenue of nearly $600 billion. Therefore, whether engineers deploy AR for professional or personal reasons, the segment enjoys extraordinary relevance. Below are the augmented reality stocks to buy.
Nextech AR Solutions
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Microsoft’s (NASDAQ:MSFT) latest innovations deliver relevancies for the AR space.
Microsoft entered the space with its HoloLens 2 headset, which incorporates a self-contained holographic framework.
Geared specifically for enterprises, the HoloLens 2 carries significant applications. For instance, mechanical engineers can receive on-the-spot training, accelerating the learning process and reducing errors, thereby boosting overall productivity.
Financially, MSFT rates as an agreeable example of augmented reality stocks to buy. Carrying double-digit growth rate as well as a sector-dominating net margin, investors can buy MSFT with confidence.
As well, Wall Street analysts peg MSFT as a consensus strong buy. Currently, their average price target of $291 implies a strong upside.
Alphabet (GOOG, GOOGL)
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Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) may have suffered badly in 2022 giving up nearly 30% of equity value. At the same time, Alphabet commands exceptional relevancies thanks to its all-encompassing Google ecosystem. Not surprisingly, Alphabet also ranks highly as one of the augmented reality stocks.
Google’s AR platform overlays digital content and information onto the physical world, just as if they were really there.
For instance, with its platform, Google can point out exactly where your desired destination point stands. That could be extremely helpful when going to a job interview or traveling to a foreign country.
Better yet, despite the woes, Wall Street analysts peg GOOG as a consensus strong buy. Further, their average price target pings at $124.60.
Himax Technologies (HIMX)
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A fabless semiconductor solutions provider, Himax Technologies (NASDAQ:HIMX) focuses on display imaging processing technologies. Himax produces display driver integrated circuits and timing controllers used in electronics from TVs to auto-navigation to virtual reality.
Regarding its relevance to AR, Himax provides specialized panels, projection lens modules and light guides to make the innovation work.
Generally speaking, business has been good, though it’s been impacted more recently by tech sector hiccups. Still, its revenue growth rate over the past three years comes out to 20.8%, outpacing nearly 75% of the competition. As well, the company enjoys a net margin of nearly 20%, well above the sector median.
As a bonus, from an analysis of discounted cash flow (DCF), HIMX rates as significantly undervalued. Therefore, HIMX easily ranks among the augmented reality stocks to buy.
Axon Enterprise (AXON)
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Known for its non-lethal projectile weapons systems and police body cameras, Axon Enterprise (NASDAQ:AXON) carries a bit of a controversial reputation.
It’s an ironic label though because Axon develops law enforcement tools to mitigate dangerous police interactions. However, the firebrand topic of police conduct brings much-needed relevance for Axon Enterprise.
Aside from its tasers and body cameras, Axon also focuses on law enforcement training through combined AR and VR platforms. Given the increased dynamism that police officers face these days, advanced training protocols represent a must-have.
Most importantly, they may dramatically improve the odds of officers returning home safely to their families while facilitating minimal impact on civil society during the apprehension process.
Now, to be fair, AXON is significantly overvalued on a DCF basis. However, the underlying enterprise features a strong balance sheet. As well, it enjoys outstanding revenue growth and above-sector-average net margins.
Lastly, analysts peg AXON as a consensus strong buy. Therefore, it’s one of the augmented reality stocks to buy.
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Nintendo (OTCMKTS:NTDOY) ranks among the top video game console manufacturers.
Staying true to its heritage of family-oriented fun, Nintendo shies away from the grittier side of the gaming industry. This decision hasn’t hurt the brand one bit, which continues to be popular among all age groups.
Still, aligning with family values doesn’t mean Nintendo never innovates. Quite the contrary, in 2021, Nintendo announced a partnership with AR specialist Niantic. Its purpose centers on jointly developing apps that combine Niantic’s real-world AR technology with Nintendo’s well-known characters.
Overall, Nintendo offers an extremely attractive package for investors seeking undervalued augmented reality stocks to buy. For one thing, the company features zero debt on its books. Operationally, Nintendo posts a three-year revenue growth rate of 12.8% and a net margin of 31%.
For all this, the market prices NTDOY at a forward multiple of 15.08. As a discount to earnings, Nintendo ranks better than 67.57% of the competition.
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A social media network and camera technology firm, Snap (NYSE:SNAP) represents one of the riskiest names among augmented reality stocks.
On one hand, Snap’s Snapchat app caters strongly to young people. On the other hand, it’s quite possible for this cohort to age out of the platform. and move to rival networks feature greater utility, such as for looking for jobs.
That said, Snap helps to bring fun to AR initiatives. While it lacks the serious tone of some other augmented reality stocks, the truth is that Snap could command dominance in a certain niche and viable segments of the AR ecosystem.
However, prospective investors need to treat SNAP as a high-risk gamble. Sure, shares bounced up nearly 23% in the year so far. Nevertheless, in the trailing one-year period, SNAP hemorrhaged almost 74% of equity value. On the optimistic front, shares have largely stabilized since August last year.
Not surprisingly, stability hasn’t been enough to impress analysts, which peg shares as a consensus hold. Therefore, exercise extreme caution before dipping into SNAP.
Nextech AR Solutions (NEXCF)
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Although a promising enterprise in its namesake industry, Nextech AR Solutions (OTCMKTS:NEXCF) carries significant risks.
There’s a reason why it’s last on this list and much of it centers on its price tag. Shares trade hands at around 60 cents a pop. Typically, when you’re dealing with literal penny stocks, a bad moment is never too far away. Be extremely careful here.
Nevertheless, Nextech still sits on this list of augmented reality stocks. For most investors, NEXCF features too high of a risk profile to be worthy of consideration. In contrast, speculators might appreciate the potential stratospheric upside. Nextech bills itself as a leader in end-to-end AR solutions for e-commerce, advertising, education and the metaverse.
Predominantly, Nextech may help change the game in retail. With e-commerce sales continuing to make gains, consumers need mechanisms to understand the appropriate fit of desired items. With Nextech’s AR solutions, customers can visualize exactly how a product will fit in their homes or their persons.
Financially, Nextech must work on its profitability, which is currently negative. However, it does have decent strengths in the balance sheet, thus potentially attracting speculators. Also, one analyst covers NEXCF, assigning it a whopping upside growth potential of over 314%.
On the date of publication, Josh Enomoto did not have (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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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