By: Aaryaman Ashind
Investors should stay on top of new technologies that will result in far-reaching effects in multiple spheres. For example, those who were early in recognizing how smartphones would impact everyday life or how cloud computing would revolutionize business operations, have made a fortune.
AR has the potential to impact how people socialize, and spend their time and money. For businesses, there are a number of AR applications for marketing, remote working, training workers, and increasing productivity.
Here are the four best Augmented Reality stocks for the second half of 2020:
Apple, Inc. (AAPL)
AAPL is working on its own augmented reality (AR) eyewear — Apple Glass — and has already registered patents for it. These AR glasses will come with a bunch of features such as eye-tracking, stereoscopic rendering, and gaze-based interaction. One interesting feature is enhancing the privacy of Apple devices by only allowing the wearer to be able to see the screen.
AAPL’s stock has increased 70% from its March low. Given the upcoming iPhone 12 launch, this momentum could last all year.
The consensus estimate for AAPL’s EPS for the quarter ended June 2020 indicates a 7.8% year-over-year decline. However, the earnings surprise history for AAPL looks pretty good, as the company beat the consensus EPS estimates in each of the trailing four quarters.
How does AAPL stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Industry Rank
A for Peer Grade
A for overall POWR Rating
You can’t ask for better. The stock is also ranked #1 out of 28 stocks in the Technology – Hardware Industry.
Microsoft Corporation (MSFT)
MSFT has been dipping its toes into the AR market for a while now. The company’s Hololens 2, which is a wearable AR device, is already available. It was recently made available on the Microsoft Store for purchase. MSFT’s AR offering already has a few apps with great practical applications such as the Layout and Remote Assist. Microsoft’s AR product is more geared towards business customers.
MSFT is also partnering with another AR company called RealWear in an effort to bring Teams to the device. This could potentially be a gamechanger for remote working environments.
MSFT has also been performing pretty well in the “new normal,” and it has added close to 50% to its stock price since this year’s low of $132.5 hit on March 23rd due to the market crash.
The consensus ESP estimate for the quarter ended June is $1.37 is in line with the year-ago number. Also, the consensus revenue estimate of $36.5 billion indicates a year-over-year increase of 8.2%. MSFT’s earnings surprise history looks impressive as well with the stock beating consensus EPS estimates in each of the trailing four quarters.
It’s no surprise that MSFT is rated “Strong Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, Buy & Hold Grade, Peer Grade and Industry Rank. In the 82-stock Software- Application industry, it is ranked #1.
Lumentum Holdings, Inc. (LITE)
LITE focuses on optical and photonic products which have applications in the optical networking and commercial laser industries. The company makes 3D sensors for Apple which powers the facial recognition capabilities of the iPhone, and it may play a big role in Apple’s AR ventures in the future.
Lumentum’s 3D sensing offering also has a major application in AR for gaming, which could be an area of massive growth in the near future.
LITE’s recent price performance reflects its ability to capitalize on the trend towards augmented reality. The stock has gained more than 30% since hitting its 52-week low in March.
LITE has an impressive earnings surprise history with the company surpassing consensus EPS estimates in each of the trailing four quarters.
LITE is rated “Buy” in our POWR Ratings system, consistent with the strength in its business model. It also has an “A” for Trade Grade and Peer Grade and “B” for Buy & Hold Grade and Industry Rank. It is also ranked #11 out of 52 stocks in the Technology – Communication/Networking industry.
Vuzix Corporation (VUZI)
VUZI designs, manufactures, and sells wearable devices in the US and worldwide. It is one of the leading suppliers of smart glasses and AR technology and products. VUZI recently announced that it was granted a series of patents geared towards developing new AR technology. The company has grown from holding 90 patents to more than 166 patents in the last three years.
The company is putting more focus on developing AR technology for enterprise-use rather than consumer-use, and this shift could lead to higher revenues in the future as so far, consumer AR apps have largely flopped.
VUZI’s stock has climbed more than 350% from the YTD low it hit in mid-March due to the overall dip in the market. The company’s strong recovery could be part of a growth momentum that could last well for the rest of 2020.
VUZI’s consensus revenue estimate for the quarter ended June 2020 indicates a 16.7% increase from the year-ago reported number.
VUZI’s strong fundamentals are reflected in its POWR Ratings, it has a “Buy” rating with an “A” in Trade Grade and Peer Grade along with a “B” in Buy & Hold and Industry Rank. Within the Technology – Electronics group, it’s ranked #11 out of 36 stocks.