While a niche application of data storage and processing technology, biometric security is becoming an increasingly relevant sector within the broader technology industry. Back in 2021, the biometric system market was valued at $29.09 billion by Fortune Business Insights with predictions it would rise to $76.7 billion by 2029. These numbers represent a fraction of the broader value of the current tech industry as it explodes in value due to artificial intelligence (AI) developments. But the potential tripling of the industry means retail investors might want to get in on the best biometric security stocks in the next few years.
Currently, companies with a biometric security section tend to have other revenue drivers in the technology sector that make them more stable as the need for the technology grows. This represents a win-win for investors, as they can hedge their bets on the biometric security industry more safely without worrying that the technology may fall flat in growth and impede their investment’s potential.
NEC (NIPNF)
A near pure-play in biometric security systems, NEC (OTCMKTS:NIPNF) represents one of the longest-standing companies in the sector. As a result, NEC has developed a full suite of biometric authentication technologies over the years including face recognition, iris recognition, finger print and palm print recognition and even ear acoustic recognition among others.
Across the decades of developing these technologies, the company has secured several accolades from the U.S. government. Examples of these accolades include being the number-one-ranked face recognition and number-one-ranked iris recognition technology provider across benchmark tests. With such strong quality backing for its products, NEC has been able to generously grow its financial performance over the past five years, resulting in 54% share value growth in that time.
Moreover, its most recently released full-year earnings report for the fiscal year ending Mar. 31, 2024 affirmed investor confidence as metrics like revenue, profits and even cash flow from operations all stood well in the green. Now, with a potential boost coming from tomorrow’s first quarter report for fiscal year 2025, investors may want to consider taking a position in one of the best biometric security stocks by buying NEC.
3M (MMM)
Widely diversified and well-performing in 2024, 3M (NYSE:MMM) might just be one of the best biometric security stocks to buy thanks to its subsidiary, 3M Cogent. Its flagship identity verification product is Entrust IdentityGuard, which represents an all-in-one approach to traditional identity verification through technology like smartcard and mobile device authentication. Moreover, the company’s MiY-Touch indoor touch-screen biometric access control reader has remained relevant since its introduction back in 2013.
While these types of electronics make up a small fraction of 3M’s broader revenues, they contributed to a 3.3% increase in adjusted organic growth for the company’s electronics section in its second-quarter earnings report for 2024. Pair this stable industry contribution with the company’s wider successes and stability, and 3M makes a strong case for investors bullish on the biometric security industry.
Ultimately, the success of 3M’s aggregated brands and its relative dominance in the industrial adhesives market make it an overall good pick for the long term.
Darktrace (DRKTF)
Though Darktrace (OTCMKTS:DRKTF) does not directly manufacture or sell biometric security systems, the company has historically proven itself important to the industry through its specialization in device cybersecurity. That’s because no biometric authentication device is secure if it can be easily hacked, meaning it requires specialized security software.
This particular software niche is where Darktrace has excelled in its cybersecurity offerings. Even the company’s head of threat analysis, Toby Lewis, suggests securing Internet of Things (IoT) systems will be trickier moving forward due to the inherently insecure design of IoT devices. Considering that biometric scanning devices tend to be among the first line of defense in these IoT systems, Dakrtrace could become incredibly successful through its focus on this niche.
Furthermore, the company inspired investor confidence with its first-half earnings report for fiscal year 2024 as it demonstrated a 27.4% increase in revenue from the previous year’s reporting period. Pair this with the fact that over 99% of this revenue is due to recurring subscriptions, and the stability of Darktrace’s near-term growth trajectory seems particularly attractive.
On the date of publication, Viktor Zarev did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
