24. August 2021 | 13:28 CET
Meta Materials, Xiaomi, SoftBank - Undiscovered potential!
Stagnation is regression. Companies that act too slowly in competition and can only adapt insufficiently to changing conditions lose out. Innovations are a path to success. Some innovations are so significant and far-reaching that a massive upheaval occurs with the technological leap achieved. Electricity and the Internet are well-known examples. AI, 5G, robotics and new materials will have changed our reality in just a few years. As new solutions, products and markets emerge, these stocks will benefit.
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ISIN: Meta Materials Inc. | US59134N1046 , XIAOMI CORP. CL.B | KYG9830T1067 , SOFTBANK GROUP CORP. | JP3436100006
META MATERIALS INC - High-tech pioneer
This Canadian Company is doing fascinating pioneering work on a new class of multifunctional materials called metamaterials. Unique patterns or structures of intelligent, highly functional materials interact with light and other forms of energy, giving rise to properties and specifications that do not occur in nature.
With the Company's proprietary technology platform, the Canadians focus on the three core competencies of holography, lithography and wireless sensor technology, with processes supported by software and AI. Based on an extensive solution portfolio, including functional prototypes, a much faster and more cost-effective development is achieved than with conventional chemical synthesis.
Meta Materials is ideally positioned as a supplier and enabler for many global companies based on its extensive resources in terms of intellectual property, patents and trademarks. It is only with the Canadians' solutions that these corporations can offer innovative products in consumer electronics, 5G communications, health and wellness, aerospace, automotive, and renewable energy.
The Company's sales are still manageable, as was recently evident from the half-year figures. Characteristic of research-intensive high-tech companies in a relatively early phase, the Company is still in the red. Given many innovative products, a well-filled pipeline and the fact that an entirely new industry is only in its infancy, the share is worth a look. The Company, listed on the Nasdaq, currently has a market value of just over USD 800 million.
XIAOMI CORPORATION - Analysts expect profit to double
In recent years, the group has grown dynamically and has established itself as the fourth largest cell phone manufacturer globally. The goal of the Chinese is to create a comprehensive ecosystem that connects as many people as possible with high-quality services and products under fair conditions. Thus, a wide range of smart devices is also part of the spectrum offered. Devices and users are networked via what the company claims is the world's largest AI-IoT platform.
Analysts expect the Company to report more than double profits when it reports its quarterly figures soon. For the full year, experts expect revenue of USD 51 billion and profit of USD 3.1 billion. With a current market capitalization of USD 76 billion, this results in a 2021 P/E ratio of 23. The 2022 P/E ratio, on the other hand, is only 20, which represents a moderate valuation of the growth stock.
SOFTBANK GROUP CORP - No more AI investments in China for now
The Chinese government's regulatory frenzy has now hit a major regional investor over the head. Japan's SoftBank Group Corp, which invests in companies in the technology, communications, energy and finance sectors, and whose largest holding is Alibaba Group, wants to stop making investments in China in artificial intelligence (AI) for the time being. With the Vision Fund, which has around USD 100 billion, the Company invests in startups and focuses on AI. This move by the Japanese now sends a clear signal.
The prospects for the group's diversified investment portfolio are undeniably good. Currently, the stock is trading at a 60% discount to its Net Asset Value (NAV). However, it can be assumed that the weakness of the China investments will cause the NAV to fall in the short term, and thus the discount will not be quite so high. Nevertheless, the current price level at around JPY 6,000 is tempting. Analysts formulate price targets that account for an upside potential of 77%.
Groundbreaking innovations may turn science fiction into reality much faster than expected. With the three companies described above, investors can invest in innovative high-tech companies in a diversified manner with SoftBank, or a focused manner, with Xiaomi or Meta Materials. Meta Materials is the most exciting Company for us, as it should benefit as an enabler from the emergence of a huge market.