Technology stocks have been some of the hottest tickers over the past decade. If you bought any of the major tech stocks and held them over the years, chances are you made some serious profits.
More recently though, the mega-cap tech stocks seem to have been consolidating rather than continuing their upward momentum. Meanwhile, some of the smaller names have started entering the spotlight.
Check out Vuzix Corp (NASDAQ:VUZI), for instance. Most people have never heard of it. After all, the company has a market cap under $600.0 million, so it’s not really big enough to get much attention from the financial media.
However, investors who were informed enough to get on board Vuzix stock last year are laughing all the way to the bank now. In the past 12 months, VUZI stock has gone from $1.90 per share to $11.56 per share. That’s a gain of more than 500%!
Vuzix Corp (NASDAQ:VUZI) Stock Chart
Chart courtesy of StockCharts.com
Now, you’re probably wondering why this little-known stock skyrocketed. Well, Vuzix was (and is) well positioned to benefit from one of the fastest-growing industries right now: augmented reality (AR).
Vuzix Corp is a supplier of smart glasses, AR technologies, and products for the consumer and enterprise markets. Founded in 1997, Vuzix is one of the pioneers of AR, wearable computing, optics, and display engines.
While AR—alongside virtual reality (VR)—only became buzzwords in recent years, this company has been delivering tech solutions to customers for more than 20 years.
To us consumers, AR and VR are mostly associated with gaming. Indeed, even though AR/VR headsets are not cheap—and AR/VR-capable gaming consoles and computers can be more expensive—the gaming side of the industry has started to gain popularity.
But you won’t find a Vuzix-branded gaming headset. Instead, the company is mostly known for providing AR head-mounted displays in the form of smart glasses. And these products have enjoyed increasing adoption in the enterprise and health-care world.
For instance, smart glasses can help with barcode scanning, order picking, and fulfillment in warehouses. In the manufacturing industry, they can facilitate work instructions, step confirmation, and quality assurance. For field services, smart glasses enable remote support. And thanks to their lightweight design and flexible hardware, Vuzix’s smart glasses are ideal for use in health care and telemedicine.
In fact, there are already frontline health-care professionals around the world using Vuzix’s smart glasses, and the company’s list of health-care customers continues to grow. (Source: “Needham Conference Presentation,” Vuzix Corp, January 15, 2021.)
And as you’d expect from a soaring tech stock, Vuzix has achieved some very impressive growth in its financials.
In the third quarter of 2020, the company generated $2.8 million in total revenue, marking a 140% increase year-over-year. This strong top-line growth was driven by higher sales of Vuzix smart glasses products, which rose 156% from a year earlier to $1.6 billion. (Source: “Vuzix Reports Record Smart Glasses Revenues and Provides Business Outlook,” Vuzix Corp, November 9, 2020.)
The company earned a gross profit of $300,000 in the third quarter, which marked a substantial improvement from its gross loss of $200,000 in the year-ago period.
At the bottom line, Vuzix Corp incurred a net loss of $0.13 per share. While the amount was negative, the loss was narrower compared to its third-quarter 2019 net loss of $0.18 per share.
Furthermore, although Vuzix is not a big-name company, it has won many big-name customers.
For instance, last July, Vuzix was selected by Verizon Communications Inc. (NYSE:VZ) to co-develop a 5G-enabled smart glasses emergency medical service (EMS) solution for first responders and public safety. (Source: “Vuzix Selected by Verizon for Integration with its 5G-enabled EMS Solution to Deliver Enhanced Medical Augmented Reality for First Responders,” Vuzix Corp, July 9, 2020.)
In September 2020, the company announced that Clorox Co (NYSE:CLX) had started using “Vuzix M400” smart glasses to address the operational challenges brought upon by the COVID-19 pandemic. (Source: “Clorox Deploys Vuzix M400 Smart Glasses to Tackle Operational Challenges Brought Upon by the COVID-19 Pandemic,” Cision PR Newswire, September 25, 2020.)
At the time of this writing, Vuzix has not announced its official fourth-quarter results. However, the company did provide a financial update in mid-January, saying that its unaudited 2020 fourth-quarter revenues totaled more than $4.0 million. That would double the $2.0 million of revenues generated in the fourth quarter of 2019. (Source: “Vuzix Announces Financial Update with Q4 Revenues Ahead of Analyst Expectations,” Vuzix Corp, January 15, 2021.)
The AR industry is just taking off, with the market projected to be worth $77.0 billion by 2025. Vuzix Corp, despite being a relatively small company by tech-industry standards, is well positioned to benefit from the secular tailwind.
For one thing, Vuzix has an established customer base. Moreover, the company holds 184 patents and patents pending and numerous IP licenses in the video eyewear field.
Vuzix stock has already delivered enormous returns to investors. If the company can keep up its growth momentum, I wouldn’t be surprised to see VUZI stock soar to new highs.