Over the last several months, investors have poured enormous amounts of money into metaverse stocks. Between now and 2030, the metaverse market is expected to grow at a compounded annual rate of 41.7 percent.
Given these trends, there’s a natural search underway for value stocks that could indirectly profit from the emergence of metaverse technology. One of the leading stocks in this category is Himax (NASDAQ:HIMX).
Himax is a semiconductor manufacturing company specializing in image processing and display electronics. The company makes integrated circuits for a variety of image display technologies. Most importantly, Himax makes control circuits that regulate how colors are displayed on the screens of media devices.
How Himax Fits in the Metaverse
While Himax isn’t involved in creating Metaverse platforms, its technology could be key to allowing consumers to access them.
The hardware Himax manufactures is crucial for augmented reality and virtual reality headsets. As metaverse platforms gain in popularity, demand for these headsets could offer Himax a new and very large stream of sales. As a result, Himax is a possible hardware-based play on metaverse technology.
Himax has the advantage of being one of the earliest movers in the VR headset circuit space. As early as 2013, the company was making hardware for Google Glass.
This positions Himax to take advantage of future headset sales. The company is also set up to manufacture the necessary chips on a large scale, ensuring it will be able to keep up with demand and fully capitalize on metaverse opportunities.
Himax has also shown remarkable growth potential quite recently. In Q3 2021, the company’s revenues rose by 75 percent year-on-year, reaching $421 million.
Most of this growth was driven by the kind of display chips that the company could one day sell for metaverse applications. Based on the recent growth numbers, Himax appears to be in a very strong position to take advantage of the metaverse trend in the coming years.
Sold-off Stock With Potential
Historically, Himax’s share price has been quite cyclical. As new imaging technologies come out, the company tends to do well before eventually tapering off again. As a result, getting in before a major new product category begins to drive new sales to Himax could allow investors to buy at an excellent value.
Metaverse technology is also still a very new business category. While large players like Meta and Nvidia have already seen rising share prices due to enthusiasm surrounding the technology, smaller companies also stand to benefit as consumers begin accessing the metaverse. Unlike these larger companies, Himax hasn’t already started to surge due to metaverse bullishness.
The 52-week high for the stock has been around 70% higher than where the HIMX share price currently trades. This indicates that the stock has been heavily sold and perhaps is undervalued. While past pricing shouldn’t be used to predict future price movements, the sell-off does at least suggest that there’s potential value to be had in Himax if it performs well in the future.
Turning to analyst price forecasts, it’s evident that Himax has considerable future potential for gains. The median 12-month price forecast for the company’s stock is $17.67. Based on this target price, the stock could gain 56 percent over the next year.
This analysis seems to be based on the potential of a metaverse rally for Himax. Given the surge of capital invested in metaverse stocks, the time might be now to consider this out-of-favor company.
With that said, Himax isn’t without its risks. One price forecast suggests that Himax could end the year at just $4.30, losing over 60 percent of its current value in the process. This would likely reflect a situation in which Himax doesn’t benefit from a surge in metaverse development over the next year.
Cheapest Way to Invest in the Metaverse
Looking at other metaverse companies, Himax is without a doubt one of the most affordable options for exposing your portfolio to this exciting new technology.
At under $11 per share, Himax offers metaverse exposure at a price that most retail investors can reasonably afford.
While its relationship to the metaverse is indirect, the company clearly has close ties to the emerging virtual reality industry through its hardware manufacturing business.
Is Himax a Good Buy?
With a reasonable price, strong growth and a natural position in selling hardware to support metaverse platforms, Himax appears to have very real potential as a stock.
With that said, there are still some risks associated with Himax. As noted earlier, the HIMX share price tends to be cyclical. This means that there’s at least a possibility it could fall off again after reaping value from the metaverse trend.
There’s also some risk in the metaverse itself. While market enthusiasm certainly favors the metaverse at the moment, experts also caution that the technology could be overhyped. Certainly, the metaverse has significant long-term potential. However, for investors with a short to medium time horizon, the trend could prove to be too risky.
Overall, Himax looks to be a good buy if you’re bullish on metaverse technology and looking for stocks on sale. There’s a decent chance that the company is undervalued, especially given its strong growth in Q3.
Assuming headset sales spike as consumers begin to interact more widely with metaverse platforms, Himax should be in a very strong position to capitalize on virtual and augmented reality.
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