I’m going a little speculative with my conservative pick for 2022; it’s really more volatile than speculative, though, so I feel like it’s still a good fit, suggests Jason Williams, managing editor for Wealth Daily.
The metaverse — in some form or another — is coming. It may seem like a fantasy now, but so did the internet and social media. And so did personal computers back in the 1980s. So did smartphones a decade or so back.
Literally every new technology seems like something out of science fiction when it first appears in the mainstream conversation. But here you are reading an article on the internet that I shared on my social media account. And we’re both doing it from personal computers or smartphones.
What I’m getting at is that just because something seems far-fetched doesn’t ever mean it won’t become a reality. And as an investor, you can’t ignore new technology trends just because they seem foreign to you. Otherwise you miss out on those life-changing gains.
So we’re paying close attention to the developments around the metaverse and we’re investing accordingly. But some of our best gains in the past have come from “pick-and-shovel” plays.
So, my conservative pick is a company that’s not trying to create a metaverse of its own, but instead is providing the technology everyone else needs to develop theirs. It’s new to the stock market after executing a merger with a special purpose acquisition company in 2020. And it’s called Unity Software (U).
Unity is a powerhouse that’s already used by thousands of developers to create games, animation, even movies. Its big revenue driver is what’s known as a “creation engine.” Aside from video game development, that engine is used in big Hollywood productions to reduce costs and production times.
It allows producers to shoot and edit digital special effects in real time. That reduces costs drastically and also cuts down on the amount of time it takes to shoot a whole series or feature film from a matter of months to a matter of days.
And it’s already led Unity to a massive $40 billion market cap. But I’m convinced that’s only the beginning. As the metaverse continues to develop and gain adoption, Unity Software could become a $1 trillion company. But that’s going to be a long process and it’s going to lead to volatility in the shares.
So that’s what makes Unity a little “speculative” in my opinion. It’s pretty much guaranteed to be a bumpy ride to the top. But it’s size and long list of impressive customers makes it more conservative and a good fit for my 2022 top pick.