Augmented reality (AR) really hit the mainstream during the summer of 2016 when the Pokemon Go craze captured the attention of, well, almost everyone. Today the technology is expected to achieve a market value of $83 billion by 2021.

So pervasive is AR now that investors can tap into the field’s leading technology stocks in myriad ways, even beyond the confines of what would normally be considered the field’s technology moorings. Ulta Beauty, for example, has acquired AR and artificial intelligence start-ups to help customers virtually try on makeup before they buy.

Below are three AR companies that likely fit more closely to what investors might consider an AR stock, so read on to find out why you should consider Autodesk (NASDAQ: ADSK), Facebook (NASDAQ: FB), and Lumentum Holdings (NASDAQ: LITE) for your portfolio.

Constructing the future through AR

No one who has considered the AR space for any length of time is surprised to see Autodesk on the list of stocks to buy. Its 3D rendering software provides designers and creators a platform on which they can transform 2D designs into digital models that are both interactive and immersive, creating more-compelling experiences for end users.

Autodesk has a portfolio of powerful software suites to augment virtually any application, such as 3ds Max, a 3D modeling program; Maya LT game development software; its automotive modeling program VRED; and Forge, a development platform for cloud-based design.

The other thing most investors will associate with Autodesk is a rich valuation. At 54 times next year’s earnings, the AR specialist isn’t what you’d consider a bargain-basement dweller, but analysts notably believe Autodesk will generate tremendous earnings power, forecasting earnings per share can double in just a few years’ time.

It’s able to produce prodigious free cash flow, too, making it a stock investors should look at very closely.

Making AR social

Facebook might not be as tangential to AR as an investor might consider Ulta to be, though it’s also not as grounded in the field as Autodesk. Yet many people have likely encountered AR technology on Facebook if they played one of the games it offers, or through Instagram when they used one of the filters.

Facebook has been investing in AR for years now and is looking to use the technology for more than just fun stuff. It wants to expand its application to make it more relatable to everything we do, making its platforms even stickier than they already are. In the process, it looks to profit from widening the lens.

Last year it began applying AR to its News Feed, and it lets businesses use it to connect to users of Instagram’s Stories. Its acquisition of Oculus five years ago no doubt informs Facebook’s development of AR glasses, which it is creating in partnership with EssilorLuxottica.

For the many public relations issues that Facebook has, it remains a leader in many different fields, and AR is increasingly becoming one of them. AR has the potential to keep Facebook users wedded to its ecosystem while monetizing them, all the while expanding the exosystem’s borders.

Lumentum has momentum

Lumentum may be one of the leaders of augmented reality that few people have heard about. But when you start delving into the space, its market-leading position in telecom and 3D sensing markets, growing cloud and 5G wireless network deployments, and an improved commercial laser business quickly cause it to rise to the top of people’s list.

It had some setbacks earlier this year because of trade issues surrounding its largest customer, Chinese electronics giant Huawei. But that is moving toward a resolution as the U.S. and China inch closer to a trade agreement. And other companies want to use its optical and photonics products to augment their own AR ambitions.

Apple (NASDAQ: AAPL) has been another customer that has loomed large in Lumentum’s growth, and though Apple has spread the wealth by bringing in other key component suppliers such as Finisar, it’s likely to move in a direction that will require it to throw more business to Lumentum.

Bloomberg recently reported that Apple will be unveiling a new AR headset next year while its iPhone will also feature AR capabilities. There are also plans for using the technology in gaming and more, suggesting Apple will need Lumentum.

Its just-reported earnings blew past analyst sales expectations, and CEO Alan Lowe said “we are seeing strengthening demand for key differentiated products in telecom, datacom, and commercial lasers.” Look for Lumentum to gain a much higher profile in the future.

The post 3 Top Augmented Reality Stocks to Buy Right Now appeared first on The Motley Fool Canada.

More reading

• The Only Stocks You Need to Capitalize on AI Spending
• Should You Buy Enbridge Stock While It’s Below $75?

For a variety of reasons, Netflix (NASDAQ: NFLX), Roku (NASDAQ: ROKU), and Slack Technologies (NYSE: WORK) are down an average of 35% from their 52-week highs. Here’s why they are my top stocks to bounce back from the beating they’ve taken.

Streaming wars are causing a lack of faith

Other than a Goldman Sachs analyst who just reiterated his buy rating on Netflix, Wall Street is pretty pessimistic about the streaming leader’s earnings, due out next Wednesday. And even then, the Goldman analyst cut his price target 14% to $360 because of lowered expectations for profits and valuation among internet companies.

Because of growing competition in the streaming space from Disney, Apple, AT&T, and Comcast (NASDAQ: CMCSA), the market is being diluted, and Netflix will be hard-pressed to keep subscriber rolls growing.

Yet the plethora of choices that will soon arrive actually works in Netflix’s favor because a confused mind will often say no and stick with what’s familiar. It also doesn’t mean subscribers will abandon Netflix if they subscribe to another service. The streaming service actually has several levers it can pull to keep or attract subscribers, such as cutting prices, offering multiyear plans at a discount, creating a separate ad-supported tier, and more.

With Netflix stock down 27% from its recent highs, and a lot of pessimism going into its earnings report, this stock could be one to buy now.

A different streaming video play

Roku offers investors another opportunity to capitalize on a stock that is beaten down — in this case, because of an excessively negative outlook on its potential after Comcast announced it would offer free streaming boxes for its internet customers. Roku is the king of boxes and dongles, with a 39% share of the market versus around 30% for Amazon.com. If someone is now going to give away streaming devices, it will cut into Roku’s hardware business.

But Roku has been less about hardware these days and more about developing its platform to monetize it from ad revenue. While it may be approaching a saturation point with its plan to allow pop-up ads on its service — essentially an ad within an ad — the fear of competition may be overblown. Comcast’s free Flex box, for example, requires customers to also have its xFi Advanced Gateway modem to work, and they’ll have to cancel existing premium channels and repurchase them.

Roku is also branching out into new sound equipment, like its soundbar and subwoofer. It has also partnered with Walmart (NYSE: WMT) to sell those components under the retailer’s onn brand.

Roku has dropped 37% as those fears manifested themselves, but it should be able to overcome them, and any positive earnings surprise could catapult its shares higher.

Slacking off

Slack Technologies, the workplace collaboration platform, hasn’t had an easy go of it since its June direct listing. Its stock has tumbled 43% because, as with Netflix and Roku, investors are concerned about competition.

Microsoft (NASDAQ: MSFT) Teams — seen as potentially cutting into Slack’s client base — recently announced it had 13 million daily active users (DAUs). Slack, however, just announced its DAUs had jumped 20% sequentially, from 10 million to 12 million in September, and were up 37% year over year. It also had 6 million paid seats, or those who pay to use the service. Teams is available for free or at very low cost.

Analysts now believe Teams’ DAUs might not be of the same quality as Slack’s. CEO Stewart Butterfield told CNBC that the gains are simply because Microsoft users of Skype for Business have migrated over to Teams.

While Microsoft could be a potent competitor, Slack generates substantial engagement with its users, who perform 5 billion activities a week, such as texting or uploading a file. That will make the collaboration platform a sticky one, and as the market comes to realize it can hold its own, its depressed stock should rebound.

The post 3 Top Beaten-Down Stocks to Buy in October appeared first on The Motley Fool Canada.

More reading

• 2 Technology Stocks With the Kind of Potential That Could Make Millionaires
• Where Will Enbridge Stock Be in 3 Years?
• Why the Market May Be too Quick to Write Off These Railway and Telecom Stocks
• 2 Dividend Stocks I’d Buy Today and Feel Good Holding for at Least 5 Years
• 2 Canadian Dividend Stocks Yielding 4% That Appear to Have the Goods to Back It Up

Hulu also has a number of other top programs that are drawing in subscribers, including Castle Rock, The Act, Shrill, and Ramy. But The Handmaid’s Tale, with its dystopian future, remains the channel’s biggest draw. So much so that Hulu succeeded in surpassing Amazon.com (NASDAQ: AMZN) as the third most popular channel on the Roku (NASDAQ: ROKU) streaming platform.

The place to see and be seen

As the leading streaming-device maker, whose own Roku Channel is also the biggest free movie-streaming channel on the platform, the tech company is quickly becoming a premiere destination. Because of the broad distribution of its devices — whether it’s a dongle that hangs off the TV, one of its branded television sets, or now a sound bar with the Roku platform built in — a channel appearing on Roku is getting in front of tens of millions of eyeballs.

That’s important because the number of people using Roku is also attracting advertisers, creating a virtuous ecosystem that allows all to flourish. Hulu being in the top three is a major achievement, particularly as it comes from displacing Amazon, which has spent billions acquiring its own portfolio of original content, though the payoff has been hit-or-miss.

Netflix (NASDAQ: NFLX) remains the most popular channel on Roku, as it has been for years. Even back in 2014, in one of Roku’s earliest published rankings, the streaming service was the top destination for viewers. That’s unchanged today, and Netflix is followed by Alphabet‘s YouTube, Hulu, Amazon, Spectrum TV, and Sling TV, rounding out the top six.

A behind-the-scenes force

While quality programming has benefited Hulu’s rise so far, it may be parent Disney (NYSE: DIS) launching its own streaming service in November that pushes it to its next stage of growth.

Disney+ is being bundled with ESPN+ and Hulu for less than $13 a month, cheaper than Netflix but offering subscribers a lot more. Not only does a subscriber get the entire Disney movie and TV catalog, but Marvel and Star Wars come with it, too. Now, the top sports channel and a leading movie channel will be part of it.

By some measures, Hulu’s programming is the best around, even better than Netflix. Business Insider recently noted that streaming search engine Reelgood analyzed five platforms and ranked the relative quality of their programs. While such lists are undoubtedly subjective, despite Hulu having smaller content libraries than either Netflix or Amazon Prime, it was able to top both in quality along with beating HBO and Showtime, too.

A new leader in must-see TV coming

No doubt Disney itself will quickly climb the ranks of the most-watched channels on Roku. It’s going to be a tough service to beat, arguably more so than the many other streaming services that are about to launch. But that will also bring in more potential Hulu subscribers as well, and that ought to help it place higher on the list, too.

Netflix is still a quality service and one that will be difficult to surpass, but with Disney pulling even more programming from Netflix next year, it might not be long before Netflix begins falling down the Roku list, and perhaps one day Hulu will even surpass it.

The post Hulu Is Now More Popular Than Amazon Prime on Roku appeared first on The Motley Fool Canada.

More reading

• 2 Technology Stocks With the Kind of Potential That Could Make Millionaires
• Where Will Enbridge Stock Be in 3 Years?
• Why the Market May Be too Quick to Write Off These Railway and Telecom Stocks
• 2 Dividend Stocks I’d Buy Today and Feel Good Holding for at Least 5 Years
• 2 Canadian Dividend Stocks Yielding 4% That Appear to Have the Goods to Back It Up

Domino’s old 30-minute pizza delivery guarantee (any later and it was free) resulted in numerous car crashes — some fatal — and led to almost just as many multimillion-dollar lawsuits against the pizzeria, forcing it to end the guarantee. Now, Amazon may also find itself on the receiving end of a multitude of expensive lawsuits.

A driving need for speed

The Times and Pro Public article identified 60 accidents since June 2015 that resulted in serious injury or death where the driver was an Amazon contractor. They found that even though Amazon was named as a defendant in 45 of the cases, it was unclear whether the company ever had to pay out. Amazon requires the companies and drivers it contracts with to hold it blameless in the event of damage, accident, or death. Sometimes it was dropped from the lawsuits, while others had confidential settlements so it could not be determined who paid.

BuzzFeed published a similar article on the same issue. Both reports say the relentless drive of Amazon to speed up delivery to customers — first with two-day free delivery for its Prime members, and now one-day — is leading its contractors to take risks that are putting people’s lives in jeopardy.

Competition will increase the risk

But both articles say the crashes they found are most likely the tip of the iceberg. Many people involved in such crashes don’t sue, and when they do, it’s difficult to know whether the driver was working for Amazon or not since the gig work requires the use of a personal car and not a vehicle emblazoned with Amazon’s name.

Regardless, it should still be concerning to Amazon investors because as the e-commerce leader’s ambitions to become a full-fledged logistics and transportation player have grown, the likelihood of more and worse accidents grows with it. Speedy, low-cost last-mile delivery has become the key ingredient in making e-commerce a successful retail endeavor — not just for Amazon, but also for Walmart (NYSE: WMT), Target (NYSE: TGT), and others.

There were scores of lawsuits filed against Domino’s throughout the 1980s and early 1990s, but it was the jury awards from a handful of victims — particularly one in St. Louis where a jury awarded the plaintiff almost $79 million (she settled for an estimated $15 million) — that caused the pizza chain to end its 30-minute delivery guarantee.

Employees versus contractors

An important difference between Domino’s and Amazon is that the drivers were employees of the pizzeria, versus Amazon’s independent contractors. But through the use of technology, Amazon still exerts exceptional control over deliveries that could lead a jury to believe the drivers are de facto employees.

According to The Times and Pro Publica, Amazon requires that 999 out of 1,000 deliveries must be made on time. And because Amazon is able to track its packages from warehouse to the customer’s door, dispatchers can call drivers when they start falling behind schedule.

BuzzFeed says about half of all Amazon purchases are subject to next-day or even same-day delivery. As both Walmart and Target have invested heavily in their own logistics capabilities and can now rival Amazon in next-day delivery, the competitive pressure to make good on delivery promises will escalate all around.

Amazon delivered an estimated 2.3 billion packages in 2018 and spent almost $28 billion on shipping expenses, recouping some of that cost through the $119 Prime membership annual fee.

A big risk no matter how you slice it

Still, it has invested a substantial amount in its logistics program, purchasing tens of thousands of delivery trucks and vans, recruiting third-party companies in the gig economy to have their own drivers deliver packages, as well as offering employees help with seed money to start their own delivery businesses.

That’s naturally going to increase the number of serious accidents its drivers are involved in, and despite hold-harmless clauses in its contracts, Amazon may soon discover it has a Domino’s problem of monumental proportions.

The post Could Amazon’s One-Day Delivery Guarantee Actually Be a Big Risk? appeared first on The Motley Fool Canada.

More reading

• 2 Technology Stocks With the Kind of Potential That Could Make Millionaires
• Where Will Enbridge Stock Be in 3 Years?
• Why the Market May Be too Quick to Write Off These Railway and Telecom Stocks
• 2 Dividend Stocks I’d Buy Today and Feel Good Holding for at Least 5 Years
• 2 Canadian Dividend Stocks Yielding 4% That Appear to Have the Goods to Back It Up