The novel coronavirus has bankrupted several companies and pushed almost every major economy into a recession. Businesses are scrambling to reconfigure their processes to be as contactless as possible. Covid-19 will radically change how we do things permanently. And while almost all companies have suffered massive drops in revenue, some are gaining ground because they will be essential to the “new normal” that we find ourselves in — case in point, biometric stocks.
The global biometrics market is expected to grow at a compound annual growth rate (CAGR) of 16.3% to $42.9 billion by the end of 2025 from $14.9 billion in 2018. Companies and sectors that are growing during recessions are rare. So, that’s why you should home in on the biometric segment, as it presents a juicy opportunity for future growth.
But that’s easier said than done. There is a smorgasbord biometric stocks that warrant your attention. From pure-plays to diversified conglomerates, several companies are involved in the space, thereby making it a confusing decision to invest.
That’s why we present four biometric stocks to buy now:
- Intellicheck (NASDAQ:IDN)
- Bio-key (NASDAQ:BKYI)
- Nvidia (NASDAQ:NVDA)
- Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL)
Biometric Stocks: Intellicheck (IDN)
Investing in this space involves a lot of patience and faith. That brings us to the first entrant on the list, Intellicheck. Although the company is not as profitable as yet, that situation is changing rapidly. And the pandemic is helping in this regard.
In the second quarter, Intellicheck revenue grew 18% with the recurring subscriptions or SaaS revenues making up almost 90% of the total. So, at least 10% are new revenue sources.
The company operates an asset-light business model with revenue comprising of subscription fees, sale of systems, upgrades, and maintenance programs. Annual revenue growth is close to 46%, which handily outpaces the projected annual growth of the global market.
Again, as I said at the start, investors will have to keep faith in the sector. Intellicheck’s unprofitability is temporary; in my opinion, the stock is trading at a 45.8% discount to its 12-month price target of $10 per share.
We continue the list with another pure-play among the biometric stocks. Founded in 1993, Bio-key develops and markets fingerprint biometric identification technologies, including fingerprint scanners. Although the hardware is a significant chunk of its revenues, its software and maintenance divisions are where the money is.
To put that into perspective, approximately 60% of total revenue is coming in from services and license fees. And because Bio-key’s hardware is fitted with this proprietary software, this trend is unlikely to stem.
Bio-key’s core biometric software engine is WEB-key 4.0. The platform is excellent for work-from-home and remote working scenarios, both of which have become critical in this day and age.
A significant chunk of news that came out recently was that the company had signed $75 million worth of contracts with African clients. Although that is big news, the markets didn’t reward BKYI stock accordingly. You can chalk that up to a couple of things.
First, investors will want to see some execution on the African contracts before they move the needle. Secondly, a significant shareholder, Lind Global Macro, offloaded a considerable chunk of BKYI stock recently. This was likely to take advantage of shareholder appreciation due to the contracts.
Still, shares trading at a bargain is a good thing, because you can snap them up at a discount.
Now that we have gotten the pure plays out of the way, we can focus on some large conglomerates. Nvidia is a known name in the industry for graphics chips and data centers. But what you may not know is that the company is slowly carving its niche in facial recognition.
Through using artificial intelligence, the specialized semiconductor company operates a surveillance program that can scan faces round the clock. Besides its smart-surveillance technologies, Nvidia is one of the foremost names in cloud computing, high-performance gaming, and several other high-growth tech areas. It recently lost a bit of steam due to the September tech sell-off, making it the ideal time to buy into the stock.
Especially before Sony (NYSE:SNE) and Microsoft (NASDAQ:MSFT) launch the next editions of PlayStation and Xbox, respectively. Yep, you guessed right, Nvidia will supply chips for both consoles.
Alphabet (GOOG, GOOGL)
We finish off the list with the big cheese of tech, Google parent Alphabet. It seems there is no escaping the company at the moment. Alphabet is no longer just a digital ad giant. Instead, it has its hands in several pies at the moment, including biometrics.
To protect the financial info and passwords saved through Google’s autofill feature, the company has rolled out security tools based on biometrics. So, you can use your fingerprint to authenticate credit card information that you fill in.
The new autofill feature builds on its support for WebAuthn, a biometric authentication standard that allows Google users to log into some of its services without a password. That gives you a further reason to invest in Alphabet stock.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. He has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.