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Top Augmented Reality Stocks to Buy in 2020

Tirthankar Chakraborty

Augmented reality (AR) has been overshadowed by virtual reality (VR), a similar technology. Now, AR is making a name for itself in fields such as e-commerce, engineering and education.

AR is gaining popularity for its wide use in all industries, whereas VR is mostly limited to the gaming and entertainment industry. AR simply connects the real and virtual worlds, giving us a real-life experience. Just imagine bringing a piece of furniture home and checking if it fits even without adding the product to your cart.

Perhaps the most popular example of AR technology is the mobile app Pokémon Go. It has become a super hit, with players trying to spot and capture Pokémon characters that pop up in the real world.

Nonetheless, the global AR market is expected to see a compounded annual growth rate of 152% between 2019 and 2024, per the Mordor Intelligence. In fact, Allied Market Research estimated that the combined market for AR and VR will touch $571 billion by 2025-end. So, if you are interested in tapping this growing AR popularity, here’re your best bets —

Himax Technologies

Himax Technologies, Inc. HIMX provides display imaging processing technologies. The company is roughly $670 million and is currently in small-cap territory. But its market cap may increase if its growth initiatives pay off.

Himax Technologies currently develops products such as liquid crystal on silicon (LCOS) and depth-sensing cameras. These products play a crucial role in the AR market. In order to block light in AR/VR headsets, LCOS chips are used. And depth-sensing cameras are used to measure distances to place digital objects.

What’s more, several AR devices including Alphabet Inc.’s GOOGL Google Glass and Microsoft Corporation’s MSFT first HoloLens use Himax’s products.

The company’s shares have gained 29.5% over the past six-month period, slightly higher than the Electronics - Semiconductors industry’s increase of 20.3%. Himax Technologies currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Snap

Snap Inc. SNAP operates as a camera company in the United States and internationally. It generates most of its revenues from ads on Snapchat. But recently, the company’s CEO Evan Spiegel said that Snap has established “a significant lead in augmented reality” and that “smartphone-based augmented reality will be an important growth driver in the longer term.

Snapchat’s AR ecosystem includes lenses, games, and experiences, while it also continues to sell Spectacles AR glasses. At the end of third-quarter 2019, more than 600,000 lenses had been created by Snapchat members through Lens Studio, with Community lenses enjoying significant popularity. Currently, AR glasses may not generate healthy revenues but in the longer run, it will surely lock in more users and could pose tough competition to bigger rivals.

Overall, Snap is benefiting from its growing popularity among teenagers driven by the number of exciting features that the platform provides. The company’s shares have rallied 20% over the past six-month period versus the Internet - Software industry’s decline of 4%. To top it, the company’s expected earnings growth rate for the current year is 61.7%, way more than the broader industry’s projected rise of 8.9%.

 

Apple

Apple Inc. AAPL designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories worldwide. At the same time, Apple is gearing up for the impending AR dominance. After all, Apple’s CEO Tim Cook is one of the staunchest believers of AR. He had said that “in a few years, we’re not going to be able to imagine our lives without [AR]. It’s that profound a platform. I don't think there is any sector or industry that will be untouched by AR.”

The company had introduced AR software development tools called ARKit in 2017 and followed it up with ARKit 2.0 in 2019. Such development tools help start-ups build AR applications. And it won’t be a surprise if Apple comes up with its own AR product.

The iPhone maker continues to benefit from the momentum in its non-iPhone businesses, particularly Services and Wearables, strong adoption of Apple Pay and a growing Apple Music subscriber base. Shares of the iPhone maker surged 86% to close at $293 a share last year, making it the best-performing stock listed on the Dow. And the stellar run is far from over. In fact, renowned tech analyst Gene Muster expects Apple’s worth to reach more $100 this year (read more: Top Tech Predictions for 2020).

Apple currently has a Zacks Rank #2. The company’s expected earnings growth rate for the current year is 10.7%, slightly higher than the Computer - Mini computers industry’s estimated rise of 10%. The stock has surpassed the broader industry over the past year (+101.9% vs +99.9%).

 

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Click to get this free report Alphabet Inc. (GOOGL) : Free Stock Analysis Report Snap Inc. (SNAP) : Free Stock Analysis Report Apple Inc. (AAPL) : Free Stock Analysis Report Microsoft Corporation (MSFT) : Free Stock Analysis Report Himax Technologies, Inc. (HIMX) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research