Should you buy biometric stocks now? With double-digit industry growth through 2025, the answer is a solid “yes.” Add in the potential novel coronavirus tailwinds, and it seems like a no-brainer to consider names in this space right now.
But what’s the best way to play this trend? Do you go with high-risk, high-return “pure plays?” Or should you buy established tech leaders, which offer some exposure to this fast-growing space?
Why not both? By investing in several pure plays, you gain exposure to potential massive gains as this sector continues to grow. But, by including secondary plays, you can reduce potential downside if growth in the biometric space falls short of expectations.
So, which names should you consider? There are scores of companies, large and small, with exposure to this sector. Here are the 5 best biometric stocks to buy now:
- Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL)
- Aware (NASDAQ:AWRE)
- BIO-key International (NASDAQ:BKYI)
- Intellicheck (NASDAQ:IDN)
- Nvidia (NASDAQ:NVDA)
These companies are a mix of pure plays and blue-chip tech names with biometric exposure. But all of them could offer ample opportunity as technological progress and the “new normal” speed up industry growth.
Biometric Stocks: Alphabet (GOOG, GOOGL)
The Google parent may be best known for “crushing it” in the digital ad space. It also has big potential in areas like AVs (autonomous vehicles). But with some exposure to biometrics, don’t leave out GOOG as a way to play this trend.
As InvestorPlace’s Ian Bezek wrote back in January, Alphabet is central to the future of biometrics. However the company has been cautious pursuing opportunities in the space.
With good reason. Biometric technologies like facial recognition have left the company exposed to lawsuits. Playing it safe may be the best move for now.
Yet as the industry matures and regulations become clearer, GOOG stock may become a stronger biometric play. With their size and scale, Alphabet could dominate this emerging market. Whether via monetization of internally-developed technologies or through the acquisition of smaller competitors in the space.
In short, biometrics could become a catalyst for GOOG stock long-term.
Looking for a pure play biometrics stock? AWRE stock has long been a vehicle for investors looking to cash in on the growth of this industry.
Yet share price performance has been weak, to say the least. Since 2017, shares have slid from above $6 to prices nearing $2 per share during March’s big coronavirus sell-off.
But with a cash-rich balance sheet, and big potential assets, investors have started to dive back into AWRE stock. Shares are up more than 70% off their lows. But there could be more upside left on the table.
The company’s Capture Suite border security solution was recently deployed in both the U.S. and Europe. And in the commercial market, Aware could see growth from the latest release of their Knomi authentication solution.
Granted, the company’s catalysts aren’t exactly new. And results from the past few years haven’t exactly set the world on fire.
So, is now finally the time for Aware? That remains to be seen. But given their large cash position, this micro-cap biometrics play offers minimal share price downside, with big potential to head higher in the coming years.
BIO-key International (BKYI)
Like with Aware, BKYI stock is another pure play, micro-cap name in the biometrics space. Of course, with the company operating in the red for many years, they haven’t done much to wow investors.
But buying shares now, while the company remains largely in the development stage, could be a highly favorable risk/return proposition. So what does this company have in the pipeline to move the needle?
As commentators pointed out earlier this month, BIO-key has many catalysts in motion, including $75 million in contracts with government and commercial clients in Africa. But also, potential coronavirus tailwinds from increased “working-from-home.” To top it all off, the company’s recent acquisition of PistolStar could help to further scale operations.
Granted, there’s good reason why investors haven’t been overly excited about this stock. The above-mentioned catalysts could help push the stock from around $1 per share today back to its 52-week high, above $2.50 per share. But with the company’s main catalyst being in a frontier market, and the company’s continued losses a notable risk factor, this isn’t exactly a “bet the ranch” scenario.
In short, consider this one of many biometric stocks to keep on your radar, and be cautious if you decide to buy. Shares could fall back to previous lows (35 cents per share) if potential positive developments fail to pan out.
The third pure play biometric stock on this list, IDN stock has had more success than Aware or BIO-key. The first two remain works-in-progress; this name has already proven itself to investors.
What do I mean? The ID authentication solutions provider recently posted quarterly sales growth of 144% from the same quarter a year prior.
Sure the current stock price reflects this epic growth; shares have rallied nearly four-fold off their 52-week lows. But Intellicheck could just be getting warmed up.
With high demand among banks and retailers for its SaaS authentication solutions, the company could continue to knock it out of the park. Analyst consensus calls for sales to rise from $11.9 million in 2020, to $18.8 million in 2021.
At 2,216 times forward earnings, shares right now could be “priced for perfection.” That being said, a recent share offering opens the door to dilution risk.
As with Alphabet, NVDA stock is a secondary play on biometric trends. The company’s facial recognition technology business may not be a top catalyst for shares, but long-term, pursuing opportunities in this space could help sustain the company’s growth.
How so? Biometric offerings could help them make inroads into the health care space. Right now, the lion’s share of Nvidia’s sales come from gaming and data center end-users.
But a lot of enthusiasm for this stock right now is around Nvidia’s potential to branch into other lucrative, growing markets.
Investors have paid the most attention to the company’s potential in trendy AI and AV technology. Yet with the coronavirus helping to speed up technological innovation in healthcare, biometrics may be an area where Nvidia could build a multi-billion dollar business.
Granted, this shouldn’t be your only reason to buy NVDA stock. But consider this factor a reason why shares could continue to head higher.
Thomas Niel, contributor to InvestorPlace, has written single-stock analysis since 2016. As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities.