Biometric technology is becoming more common, with the market expected to grow to $65.3 billion by 2024. As a result, more investors are seeking biometric stocks to buy.
Increasing digitization trends across different sectors are leading the driving demand for biometrics. Additionally, biometrics in government initiatives and its role in cybersecurity has been one of the major drivers for growth. Apart from that, its pervasiveness with emerging technologies is likely to lead to major partnerships in different sectors.
However, biometric vendors must look for new ways to innovate to sustain demand for their products. With the advancements in technology, security systems will also need to adapt to stay abreast of changes.
There are several pure and secondary plays in the industry, which would make for superb investment options at this time.
Let’s look at three of the most attractive biometric stocks to buy in the current market scenario:
Biometric Stocks to Buy: Aware (AWRE)
Aware is one of the top biometrics software companies providing its services to various private and public sector entities. It fulfills a range of critical security functions including identity authentication, voice capture modalities and centralized data processing. Despite having a troubled 2020, AWRE stock is up 8.73%.
The company’s second-quarter was rough, with revenue down 37% year-over-year. Hence, its operating loss widened to $3.7 million, compared to an operating loss of $1.2 million in the prior-year period. The novel coronavirus resulted in procurement delays, which impacted license and services revenue.
Despite recent setbacks, there are a few exciting developments that make it an attractive investment option. Firstly, its CaptureSuite solution was chosen by a European government to expand its border security measures. The U.S. Customs and Border Protection Agency is already using the software to reduce queue buildup at the border. Moreover, it has also released an updated version of Knomi, its hugely successful mobile biometric framework.
Intellicheck is a company providing biometric solutions to retail, defense, banking and other sectors. It has a simple product that detects the genuineness of a driver’s license by scanning the barcode written on the back of the license. It does so with 100% accuracy and has one of the best customer retention rates in the sector. The 12-month return for IDN is a remarkable 31.5%.
The company recently reported its stellar second-quarter results with an 18% growth in revenue. It more than made up for its lower SaaS revenues in the first quarter with a 49% year-on-year increase in the second quarter. Additionally, gross profits improved by 2.7% to 88.6% compared to the prior-year period.
Going forward, the company expects revenue to grow by 46%, which is significantly higher than the growth in the U.S. market.
There are a lot of positives about Intellicheck, which essentially makes it an outlier in the sector. Its unmatched success rates have helped develop a loyal customer base. It currently has minimal debt, and with its healthy liquidity position, it has enough room to scale up in the coming years.
Additionally, the market for the company’s services is growing, as its management believes that SaaS revenues from the top tier banks alone could exceed $200 million.
Biometrics is not the first thing that comes to mind when you’d think about Alphabet. However, the reality is that the Google parent has its tentacles in an array of businesses. It wouldn’t be wrong to say that a company such as Alphabet could take the biometric industry to the next level.
Therefore, expect GOOG stock to benefit from the company’s strategic investments in the biometric space.
However, the company has hit a road-block as far as its investments in the industry are concerned. Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), and Google are being sued for breaching data privacy laws in Illinois for using personal biometric data without consent. The plaintiffs argue that the companies were collecting biometric data from IBM’s (NYSE:IBM) “Diversity in Faces” database to train their facial recognition systems.
In another lawsuit, a pair of children from the same state claim that Google collected biometric information through its educational software without their consent.
Hence, it’s clear that things are looking dicey in the biometric space for Alphabet. However, once its legal woes are resolved, I expect the company to play a massive role in its expansion. That makes it one of the biometric stocks to buy.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.