The term ‘metaverse’ has been bandied about a lot recently. As has the term ‘metaverse stocks.’ Investors are scrambling to get in on the ground floor and attempt to gain big by getting in early. But what are metaverse stocks? Let me explain and provide an example of one I like for my holdings currently.
What are metaverse stocks?
The term metaverse is defined as a three-dimensional world that is accessible to all. It refers to a virtual space that enables social interaction with others, for many purposes such as entertainment or business.
One of the best examples I can think of is when I use my virtual reality (VR) gaming headset and interact with other gamers. This virtual communication occurs in the metaverse.
As well as VR, the metaverse also covers ‘augmented reality.’ This is when the real world and virtual world come together. An example of this is the augmented reality game Pokemon Go from the famous Pokemon franchise. This was a hugely popular game a few years ago.
A metaverse stock is a share in a company that presents, supports, or enables the metaverse.
One metaverse stock I like
The biggest area of growth in the metaverse is thought to be virtual and augmented reality. In order for the metaverse to excel in this and other areas, the quickest and most reliable online network infrastructures are needed. This is why I like Calnex Solutions (LSE:CLX).
Calnex is the world leader in testing and measurement solutions to prove and monitor the performance and reliability of the global telecommunications sector.
Calnex is a new addition to the UK market and I believe it could be a good opportunity to get in early. Other metaverse stocks will be new additions to the market but there will be some established companies diversifying towards this new craze.
As I write, Calnex shares are trading for 121p. At this time last year the shares were trading for 2% less at 118p.
One of the risks with Calnex is that it only listed on the UK market approximately 15 months ago. Its progress since that time has been supported by growth and excellent results. There is a chance that results and growth slows down, affecting the share price and its investment viability.
Calnex has a good track record of performance. I do understand past performance is not a guarantee of the future, however. Looking back, I can see revenue and gross profit have increased year on year for the past four years. Coming up to date, interim results for the six months ending 30 September, released in November, were impressive. Revenues increased by 20% compared to the same period last year. In addition to this, net income increased by 24%. It also reported growth in all its key market segments.
The adoption of 5G and the rise of cloud computing will help firms like Calnex, especially as the need to monitor network reliability will increase. Metaverse stocks will continue to soar in popularity, in my opinion.
At current levels I’d happily add Calnex shares to my holdings and hold them for a long time. I believe they could provide lucrative returns over the longer term, especially as growth increases and the metaverse and its adoption expands.
Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
This post was originally published on Motley Fool
