If you want to adjust your investment portfolio to stay with the times, look no further.
For many, augmented reality (AR) stocks are a novelty. The AR industry is forecasted to grow by 33.5% annually until 2031, illustrating its secular growth prospects. Also, numerous AR stocks are backed by systematic factors, allowing investors to generate superior returns.
Despite the industry’s potential, undervalued AR stocks are few and far between, as information about the industry is widely dispensed. Therefore, I journeyed to find three overlooked and underpriced augmented reality stocks. My screen focused on fundamental aspects, company-specific events and technical analysis. Moreover, I factored in valuation multiples to ensure a holistic analysis.
Importantly, augmented reality stocks are risky, meaning investors should be willing and able to take risks before investing in them. However, if you’re a risk-seeking investor like me, then examine three augmented reality stocks worth considering.
Vuzix Corp. (VUZI)
Vuzix (NASDAQ:VUZI) is a vertically integrated augmented reality company servicing numerous end markets, including security, defense, and enterprise clients. The company was founded in 1997, but its product line only recently started to flourish amid a shift in the consumer environment.
I have much hope for VUZI stock, as I expect it to benefit from lucrative end markets and financial market-based support. Furthermore, Vuzix has formed critical partnerships, allowing it to scale. For example, the company recently partnered with Avegant to develop and supply optical modules. And additional partnerships may be in the offing, given Vuzix’s nimble yet orchestrated business model.
VUZI stock has lost more than 40% in the past six months, largely due to consecutive quarterly earnings misses. However, VUZI stock’s forward price-to-sales ratio of 7.8x is approximately 65.68% lower than its five-year average, suggesting it is relatively undervalued. Moreover, VUZI stock recently breached its ten- and 50-day moving averages, indicating that it has reached a support level.
In essence, Vuzix is a contrarian stock with secular prospects. I’m bullish here!
Nextech3D.ai. (NEXCF)
Nextech3D.ai (OTCMKTS:NEXCF) is a high-quality artificial intelligence (AI) image generator. The company provides strong value propositions, including cost-saving, time efficiency and dynamic image generation. Although in its early stages, Nextech3D.ai might experience tremendous traction in the coming years, allowing it to scale its operations.
Recently, the company proved its worth by delivering a promising first-quarter earnings report. Nextech3D.ai achieved C$1.02 million (approximately $750,000) in quarterly revenue, illustrating its use case. Additionally, the company’s gross profit margin grew by an impressive 70% year-over-year (YOY)to 51%.
I like the look of this company, as it has a bright concept and a margin expansion story. As mentioned before, Nextech3D.ai’s first-quarter gross profit margin expanded. However, the company anticipated additional enhancements due to its cost-cutting program. In fact, it forecasts its gross profit margin to settle between 70% and 80% by its next reporting quarter.
Lastly, NEXCF has a sound valuation outlook. For instance, it has a price-to-sales ratio of 1.84x, which is exceptionally low for a company with Nextech3D.ai’s growth potential.
WiMi Hologram Cloud (WIMI)
WiMi Holdings (NASDAQ:WIMI) is a holographic augmented reality platform that provides advertising and entertainment services. The company aims to become China’s largest holographic ecology, which is no easy feat but lucrative if successful.
I decided to include WIMI stock on the list as it provides a diversification tool via its exposure to China. Moreover, WiMi Hologram Cloud operates in a highly skilled domain, meaning it is protected by high barriers to entry.
WiMi Hologram Cloud released its full-year earnings report in April, revealing CN¥585.4m (approximately $80 million) in revenue and a net loss of CN¥421.2m (approximately $58 million). Although its financial results are shaky, I anticipate the firm’s fundamentals will improve in the next few years as it consolidates its market share via succinct product development.
It is needless to say that WIMI stock has its flaws. However, it provides an excellent early-stage opportunity, especially considering it has a price-to-sales ratio of merely 0.88x.
On the date of publication, Steve Booyens 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.
