The Metaverse was once thought to be the next iteration of the internet. However, after billions of dollars of investments from tech companies, the Metaverse has yet to live to its full potential. Still, the largest tech companies in the world continue to invest in the Metaverse in hardware and software. It’s surprising how advanced the technology has become in just a few short years. As investors, the best investments are made in the early, undercover ideas that others may not fully understand. Here are three Metaverse stocks to buy for those interested in the opportunity and possibility of the Metaverse.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) is a no-brainer as one of the top Metaverse stocks to buy after changing its name from Facebook to Meta in 2021. As of May 2024, Meta is the seventh-largest company in the world by market cap and one of only seven companies worth more than $1 trillion. How does Wall Street feel about Meta? In April, 53 of 62 analyst recommendations were a Buy or Strong Buy rating. Additionally, its average price target of $516.13 is nearly $40 higher than its current price of $476.20.
Since 2020, the Reality Labs department at Meta has lost over $45 billion. While CEO Mark Zuckerberg has said that spending will decline on the Metaverse, Reality Labs will continue to operate. Products like the Oculus AR/VR goggles and brand new Rayban Meta Smart Glasses have demonstrated their commitment to the Metaverse. Meta also sees an opportunity to expand to enterprise solutions and collaboration tools.
After gaining 37.5% in 2024, Meta’s stock remains cheap on a price multiple basis. Shares trade at just 8.8x sales and 24.1x forward earnings while maintaining an impressive 32% revenue CAGR over the past ten years. Even beyond its Metaverse potential, Meta is a company that is firing on all cylinders and shareholders can count on being richly rewarded.
Apple (AAPL)
Apple (NASDAQ:AAPL) is a name that needs no introduction. It is the second-largest company in the world, next to Microsoft (NASDAQ:MSFT). Of the 38 analyst recommendations received in May, the stock has 32 Buy or Strong Buy ratings. The average analyst price target of $202.36 also represents a strong 10% upside from the current price.
With the launch of its VisionPro Headset earlier this year, Apple jumped headfirst into AR/VR. VisionPro only adds to Apple’s strong hardware base, with more than 2.2 billion active devices worldwide as of February 2024. With the headset on, users can operate most applications from the Apple ecosystem in real-time virtual reality. From messaging to streaming videos to Facetiming friends worldwide, VisionPro gives a small taste of Apple’s long-term plans in the Metaverse.
Apple stock is trading at a relatively reasonable 7.4x sales and 27.9x forward earnings. After dipping its toe into the Metaverse and recently committing to building data center chips for AI, investors should look to Apple as a company that may be on the cusp of its next big growth story.
Autodesk (ADSK)
Autodesk (NASDAQ:ADSK) is a tech company that builds software platforms for architecture and design. Analysts remain bullish on the stock despite ADSK returning a loss of about 7.0% this year. As a testament to this, the average analyst price target of $287 represents about 30% upside from its current price and the street-high price target of $320 is nearly 50% higher.
This company utilizes the Metaverse as a way for users to design and model buildings in virtual reality. Using the Metaverse, Autodesk allows for greater remote collaboration and a more precise simulation. In this way, Autodesk is one company that uses Metaverse to improve efficiencies and productivity for the users of its software platforms.
Due to its underperformance this year, Autodesk is trading at more attractive and depressed multiples. With shares trading at just 8.5x sales, its P/S ratio is nearly the lowest it has ever been in the past five years. While Autodesk doesn’t get the coverage that Meta and Apple get, you can bet on it as a well-run software company that will only continue maintaining its 16% five-year revenue CAGR.
On the date of publication, Ian Hartana and Vayun Chugh 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.
