S&P 500   4,455.48
DOW   34,798.00
QQQ   373.33
S&P 500   4,455.48
DOW   34,798.00
QQQ   373.33
S&P 500   4,455.48
DOW   34,798.00
QQQ   373.33
S&P 500   4,455.48
DOW   34,798.00
QQQ   373.33

7 Virtual Reality Stocks That Can Deliver Very Real Profits

Posted on Friday, September 10th, 2021 by MarketBeat Staff
7 Virtual Reality Stocks That Can Deliver Very Real ProfitsAre you ready for the metaverse? Yeah, I’m not either. But many people are enjoying living their life in a virtual world. However, virtual reality and augmented reality goes beyond the world of video games. The applications for this technology include remote assistance, training, and education.

And like e-commerce, this was a sector that experienced significant growth during the Covid-19 pandemic. Necessity frequently inspires new ways of thinking and so it is that millions of Americans had to figure out how to do things remotely.

But what you want to know as a prospective investor is whether there’s more growth in store. Fortune Business Insights reports that the global market for VR gaming will reach $45.2 billion by 2027. That’s up from $5.1 billion in 2019 and $17 billion in 2020. That comes out to a compound annual growth rate (CAGR) of 31.8%. That should get your attention. It’s certainly drawn the attention of many of the tech giants. Many of the FAANG stocks are investing in this market with the expectation of massive future growth.

If you’re looking to invest in this growing sector, we’ve put together this special presentation that highlights seven virtual reality stocks that, while they dabble in the virtual world can deliver real profits for your portfolio.

#1 - Facebook (NASDAQ:FB)

Facebook logo

Facebook (NASDAQ: FB) is the first of our virtual reality stocks to buy. It was the company’s CEO Mark Zuckerberg who told investors that they will soon be living in the metaverse. However, you might expect that from Facebook. The company has skin in the game after its purchase of Oculus in 2014. If nothing else this should give investors confidence that the social media giant is committed to branching out.

As a down payment on this commitment, Facebook recently launched its first set of smart glasses. The glasses allow wearers to listen to music, take calls and share photos and videos across Facebook’s services using a companion app. However, the $299 glasses do not feature augmented reality, which the company has recently said they are at least five years away from delivering.

FB stock is sitting just below its 52-week high, but recent upward price movement suggests that investors may be catching up with the analysts. At least 15 analysts have boosted their price target for FB stock since the company delivered earnings.

About Facebook
Facebook, Inc operates as a social networking company worldwide. The company engages in the development of social media applications for people to connect through mobile devices, personal computers, and other surfaces. It enables users to share opinions, ideas, photos, videos, and other activities online.Read More 

Current Price: $352.96
Consensus Rating: Buy
Ratings Breakdown: 33 Buy Ratings, 5 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $406.45 (15.2% Upside)


#2 - Apple (NASDAQ:AAPL)

Apple logo

Apple (NASDAQ: AAPL) is expected to enter the VR sector with a headset that is rumored to be “significantly lighter” than competitor models. Other features are said to include high-end displays, eye-tracking technology, and over a dozen cameras that will track hand movements and capture footage. And if rumors are true, this won’t be the only VR product that Apple will be introducing.

The headset won’t be on the market for at least another year and that may be delayed due to the current supply chain issues. You can accuse me of hyperbole, but investors have reason to believe it will be worth the wait. The company has a history of exceeding expectations.

And after its stock split in 2020, AAPL stock sets up as a fairly inexpensive stock in the tech sector. The stock is trading right about at its consensus price target, but is likely to move higher if the company makes good on its pledge to launch its next iPhone on time. That would make now a good time to enter a position.

About Apple
Apple, Inc engages in the design, manufacture, and sale of smartphones, personal computers, tablets, wearables and accessories, and other variety of related services. It operates through the following geographical segments: Americas, Europe, Greater China, Japan, and Rest of Asia Pacific. The Americas segment includes North and South America.Read More 

Current Price: $146.92
Consensus Rating: Buy
Ratings Breakdown: 25 Buy Ratings, 5 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $164.81 (12.2% Upside)


#3 - Immersion Corporation (NASDAQ:IMMR)

Immersion logo

Up until now, we’ve been focusing on established companies in the technology/gaming space. For risk-tolerant investors who are looking for a more speculative stock, Immersion Corporation (NASDAQ: IMMR) is a solid choice.

The key benefit to owning IMMR stock is that it’s a pure-play on virtual reality. The company’s sole focus is developing VR technologies. That means in addition to developing headsets and software that deliver a VR experience, they also deliver the technology that power systems such as touchscreens.

To that end, the company has over 3,200 patents that are either issued or pending. These serve as proprietary assets that give investors another reason to invest in the company.

The downside to this is that the company has found itself the target of lawsuits regarding its patents. And it appears that at one point, IMMR stock was caught up in the meme stock craze. However, if you’re looking for an inexpensive stock that has upside potential, Immersion could be an ideal choice.  

About Immersion
Immersion Corp. engages in the creation, design, development and licensing of patented haptic innovations and software. The firm offers touch sense platform and design services. It focuses on the following target application areas: mobile devices, wearable, consumer, mobile entertainment and other content, console gaming, automotive, medical, and commercial.Read More 

Current Price: $7.06
Consensus Rating: Buy
Ratings Breakdown: 1 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $15.00 (112.5% Upside)


#4 - Unity Software (NYSE:U)

Unity Software logo

Unity Software (NYSE: U) is best known for its video game and software development. And as a video game stock, the company is a great stock to own. However, it has a separate business division that develops software for virtual reality devices. If you believe in such claims, Unity says that companies use its software to power their virtual reality games more than any other platform.  This is particularly true with battle-related gaming.

So why not buy a great video game company that also lets you take advantage of the growing trend towards virtual reality?  The company has only been publicly trading since September 30, 2020. Since then, U stock is up 53.6% and that’s actually down from its closing price of $153.47 on December 31, 2020.

Unity is not yet profitable, although in its last earnings report it showed marked progress towards that goal. And the company has been increasing its revenue every quarter since going public.

About Unity Software
Unity Software Inc operates a real-time 3D development platform. Its platform provides software solutions to create, run, and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices. The company offers its solutions directly through its online store and field sales operations in North America, Denmark, Finland, the United Kingdom, Germany, Japan, China, Singapore, and South Korea, as well as indirectly through independent distributors and resellers worldwide.Read More 

Current Price: $142.52
Consensus Rating: Buy
Ratings Breakdown: 10 Buy Ratings, 2 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $129.92 (8.8% Downside)


#5 - Nvidia (NASDAQ:NVDA)

NVIDIA logo

A different way to invest in virtual reality is to look for the picks and shovel stocks. That is the companies that provide the crucial elements that make products a reality. And when it comes to VR/AR products, like many sectors, that means looking at semiconductor companies, and that’s a reason to consider Nvidia (NASDAQ: NVDA).

Nvidia is already among the leaders in developing the graphic processing units GPUs that are used by consumers and businesses. And when it comes to VR gaming, the need for processing power will be equally if not more important than the actual products.

After its 4-for-1 stock split in July 2021, NVDA stock is currently trading above its consensus price target. However, we are only at the beginning of what is going to be a multi-year movement. And Nvidia is an attractive stock for many sectors beyond virtual reality. So investors can look for the stock to pull back before taking a long position.

About NVIDIA
NVIDIA Corp. engages in the design and manufacture of computer graphics processors, chipsets, and related multimedia software. It operates through the following segments: Graphics Processing Unit (GPU), Tegra Processor, and All Other. The GPU segment comprises of product brands, which aims specialized markets including GeForce for gamers; Quadro for designers; Tesla and DGX for AI data scientists and big data researchers; and GRID for cloud-based visual computing users.Read More 

Current Price: $220.81
Consensus Rating: Buy
Ratings Breakdown: 28 Buy Ratings, 2 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $215.84 (2.3% Downside)


#6 - Sony (NYSE:SNE)

Sony logo

One way to approach purchasing virtual reality stocks is to look for trends within the trend. When it comes to virtual reality stocks, instead of creating a metaverse, look to what already exists. By this I mean, role-playing game franchises that are driven by a storyline.

Which makes a case for Sony (NYSE: SNE) the world’s largest seller of video gaming consoles and the creator of exclusive gaming franchises such as God of War and The Last of Us. One competitive advantage that the company cites is the ability for game players to view the game in their headset while other players can view it on a TV screen.

The company already has a virtual reality headset in market with its Playstation VR. Sony released Playstation 5 in November 2020 and is expecting to sell 4 million systems this year.  SNE stock is near the price target set by analysts. However, it’s about 10% below its 52-week high.

About Sony
Sony Corporation designs, develops, produces, and sells electronic equipment, instruments, and devices for the consumer, professional, and industrial markets worldwide. The company distributes software titles and add-on content through digital networks by Sony Interactive Entertainment; network services related to game, video, and music content; and home and portable game consoles, packaged software, and peripheral devices.Read More 

Current Price: $117.61
Consensus Rating: Hold
Ratings Breakdown: 1 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: N/A


#7 - Lumentum Holdings (NASDAQ:LITE)

Lumentum logo

Another picks and shovel stock that rounds out our list of virtual reality stocks is Lumentum Holdings (NASDAQ: LITE). The company manufactures optical and photonic products. As it relates to virtual reality, Lumentum sells optical chips and 3D sensing chips and one of its key customers is Apple, which then uses the chips to introduce interactive VR features in its iconic iPhones.

As demand for virtual reality features increases so will the company’s customer base. In fact, this demand is the primary revenue driver for the business. This could be one reason for the volatility in LITE stock.

 The stock is a favorite of the analyst community. Five analysts have boosted their price target for the stock since the company reported earnings on August 17. Part of the reason is the company’s guidance. Earnings are now expected to be in a range of $1.47 per share to $1.61 per share topping analysts' expectations for $1.45.

About Lumentum
Lumentum Holdings, Inc engages in the provision of optical and photonic products. It operates through the Optical Communications (OpComms) and Commercial Lasers segments. The OpComms segment includes a range of components, modules, and subsystems to support customers including carrier networks of access (local), metro (intracity), long-haul (city-to-city and worldwide), and submarine (undersea) applications.Read More 

Current Price: $86.58
Consensus Rating: Buy
Ratings Breakdown: 11 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $96.76 (11.8% Upside)

 

One final thing to consider about virtual reality stocks is that this is still a niche industry. That’s reflected in the price of VR and AR devices which is still prohibitive for many consumers. And even as applications for this technology are growing, there are many more that have not been developed yet.

Do you know what that means? If the sector grows at anywhere near the CAGR that’s expected, VR and AR devices will become an entertainment staple in many homes.

Some of the stocks in this presentation are among the hottest in the tech sector. Others are pure plays and may feel more speculative. One way that you can even out your risk is to invest in an exchange-traded fund (ETF) that tracks companies in the sector.

Investors looking for such funds may consider the BlueStar Augmented and Virtual Reality Index which is made up of a modified equal-weight portfolio of companies whose products or services are largely tied to the development or commercialization of VR or AR technologies.

Top Ten Brokerages You Can Trust

There are more than 500 brokerages and research houses that hire analysts to issue ratings and recommendations. Collectively, these brokerages and their analysts publish approximately 250,000 ratings each year. Every trading day, there are nearly 700 reports and recommendations that are released to the public. To say that it's difficult to separate the signal from the noise when interpreting this data would be an understatement.

MarketBeat has developed a system to track each brokerage and research house's stock recommendations and score them based on their past performance. If Goldman Sachs predicted that Apple's stock price would hit $150.00 on a specific date, how accurate were they? If Bank of America issued a "strong-buy" rating on a stock, how did that stock perform compared to the broader market over the following twelve months? This tracking system has been applied to the 1,000,000+ ratings that MarketBeat has tracked during the last ten years to identify which brokerages you can really trust (and which you can safely ignore).

This slide show lists the 10 brokerages who have issued the most accurate analyst recommendations over the past several years, as measured by the performance of their "buy" ratings and the accuracy of their price targets.

View the "Top Ten Brokerages You Can Trust" Here.





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