Although the Federal Reserve isn’t finished with increases in interest rates, the United States economy still remains strong. The Atlanta Fed’s GDPNow forecasting model is pointing to a 5.9% growth rate for real gross domestic product (GDP) in the third quarter, and chief market strategist at Bannockburn Global Forex in New York Marc Chandler states that “the economy is still accelerating.” Moreover, the world’s largest economy grew at a 2% pace in the first quarter and a 2.4% pace for the second quarter in 2023 alone. This has led to the rise of metaverse stocks to buy.
With such positive economic indicators, investors are seeking lucrative opportunities in the market. Among the most promising options, metaverse-related stocks have garnered considerable attention, and these three stocks are poised to grow from their technological innovations.
So here are the three best metaverse stocks to buy.
Microsoft Corporation (MSFT)
Microsft Corporation (NASDAQ:MSFT) is a multinational technology corporation best known for its software products Windows and Microsoft 365. Although Microsoft is recognized for its Windows line products, the company has integrated the Metaverse into its online meeting platform, Microsoft Teams.
MSFT is up 33.55% YTD. Analysts have issued MSFT stock 35 “buy” ratings in the past 3 months, with a median 12-month price target of $400 ranging from $232.00 to $440.00.
The global metaverse market in 2022 was valued at $61.8 billion and is poised to grow at a 47.2% CAGR to $426.9 billion by the end of 2027 from the increasing demand for virtual reality and augmented reality. This makes it one of those metaverse stocks to buy.
Financials for Microsoft have been faring well, with a 2022 revenue of $200 billion growing 18% YoY. EPS for Q2 2023 was $2.69, representing a 20.63% YoY growth, and a PE ratio of 32.92 displays how Microsoft is expanding in financials. Microsoft also is heavily profitable through a levered FCF margin of 24.10% and a 68.92% gross profit margin of 68.92%.
Metaverse’s Mesh has been incorporated into Microsoft’s wide range of products. Microsoft Teams, for instance, enables colleagues to attend meetings with a customized avatar and push the boundaries of virtual collaborations through VR. Through the HoloLens created by MSFT, Mesh for Teams allows organizations to develop their own virtual world or “metaverses” for engineers and designers to have complete creative freedom in their creations. With the estimation of over 32.6 million Americans expected to work remotely by 2025, Microsoft’s virtual platform will be the hub for virtual meets in the future.
This exciting product is poised to generate long-term revenue for Microsoft. MSFT stock is a worthwhile investment in your portfolios based on its leading presence in the Metaverse, and more covered above.
Autodesk Incorporated (ADSK)
Autodesk Incorporated (NASDAQ:ADSK) creates 3D modeling software for various industries, including architecture, design, manufacturing, 3D art, and engineering.
ADSK is up 16.62% YTD. The 3D modeling software market was worth $28.757 billion in 2022 and is projected to be $54.508 billion in 2028, boasting a CAGR of 11.25%. The company reported a PYQ2 revenue of $1.35 billion, up 8.73% YoY due to minor revenue growth from various products by Autodesk. Earnings per share are reportedly $4.17 and had an FCF yield of 37.69%.
Autodesk is currently the biggest 3D modeling software company by market share, controlling 31% of the industry. In May of this year, the company revealed details on its newest product, Autodesk Forma. Autodesk Forma is a tool to unify workflows and automate processes using AI in the architecture and design industries.
Yahoo! Finance reports 23 analysts, 19 of whom rated ADSK stock as a “strong buy.” The mean 1-year price target from these analysts resulted in $236.48, ranging from $180.00 to $270.00. With Autodesk being a leader in the 3D modeling space, it is safe to say that ADSK stock has significant longevity and will continue to grow. This makes it one of those metavers stocks to buy.
PayPal (PYPL)
PayPal (NASDAQ:PYPL) is a world-leading American Financial Technology (fintech) company that specializes in facilitating payment types for consumers through its services. In fact, PayPal is considered one of the top 3 world’s largest digital payment platforms.
PayPal boasts strong financials with Q3 revenue at $7.2 billion, beating analyst estimates by $14.1 million and growing at an 8.2% 1-year CAGR. PayPal showcases its superior revenue-generating ability through its $4.32 billion cash from operations, which was 300 times greater than the sector median, 5.4% ROTA, and a 16.5% EBIT margin. All in all, it’s one of those metaverse stocks to buy.
Partnerships are a key growth catalyst for PayPal, as the company has partnered with a cryptocurrency-focused company, Ledger. Integrating Ledger Live software allows customers to purchase crypto on PayPal and use it as a currency. Paypal has also entered a multi-year partnership with ticketing industry company Live Nation Entertainment, allowing for increased payment options when buying tickets through PayPal and Venmo. These partnerships expand the company’s offerings and serve as long-term services for investors.
One of PayPal’s impactful developments this year is the launch of its own cryptocurrency this August, PayPal USD. With this, PayPal becomes the first US company to launch a US dollar-backed cryptocurrency and compliments its partnership with Ledger to ensure that PayPal USD is tradeable alongside other cryptocurrencies. The recent Supreme Court ruling of cryptocurrency stating cryptocurrencies are not securities on the stock market further benefits PayPal’s cryptocurrency as it is now subject to less federal regulations.
Yahoo! Finance has 32 analysts predicting a 1-year price range between $58 to $126, and an average of $86. PYPL stock is worth purchasing because of its strong financials, key partnerships that expand the industries PayPal impacts, and the launch of its new cryptocurrency.
On the date of publication, Michael Que 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.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
