- The CEO of an ETF affiliate shared his favorite “category killers” Metaverse and cybersecurity.
- Michael Lucas described class killers as over-growth stocks that could become the next FAANGs.
- He prefers Unity and Roblox over the metaverse, and CrowdStrike and Zscaler for cybersecurity.
The so-called FAANG shares – which are made up of Meta, Amazon, Apple, Netflix and Alphabet – represent the world’s most prominent and powerful technology companies.
Since 2009, the S&P 500 has risen 663% – over the same period, Alphabet shares are up 1,400%, Apple is back 5,310%, Amazon is up 5,500%, and
It rose by 10.390%. Meta went public in May 2012, and since then the stock has gone up 801%.
Stocks were highly secular-oriented 15 years ago. They’re some of the biggest on the planet, said Michael Lucas, president and CEO of exchange-traded fund company TrueMark Investments, today. “Who doesn’t look at FAANG and wish they had bought every one of these 20 years ago?”
While it is too late for investors to cash in on the massive gains of the five FAANG names, Lucas identified four cybersecurity and metaverse stocks he believes will one day prevail as “category killers.”
Lucas defines class killers as companies that “thriving” in a stage of hyper-growth and have the potential to become the dominant player within their own sectors. To determine the growth of these typically early-stage companies, he said, he prefers examining more “core” metrics such as customer adoption rather than profit, since software companies’ revenue is “mainly generated through customer acquisition.”
Metaverse: Buy Roblox and Unity Software
Among the contenders for the metaverse, Loukas’ favorite names are video game software developer unit programs and gaming platform roblox game, based on their strong core business, dominance of the gaming market, and a good fit between the angle of the metaverse and current technologies and value propositions.
“Unity truly has industry-leading technology when it comes to building digital infrastructure and creating interactive, real-time 3D content for games,” Lucas said. He added that this kind of cutting edge technology gives Unity a huge advantage over competitors due to how effective it is in creating the metaverse infrastructure and building highly realistic digital environments.
Beyond these use cases, Lucas said, unit technology and “other sectors in architecture, construction and medicine” will allow it to participate in booming industries such as NFT development.
“Unity is a beast when it comes to anything that can take advantage of AR, VR, and real-time 3D,” he said. “So think of all the applications for that.”
On the other hand, Lucas said that Roblox incorporates the existing technology into its platform. But while the technology may not be cutting edge, it is “stackable,” Lucas said, in that it allows its younger audience of about 50 million daily users to build their own interactive and immersive worlds, which “really line up with what metaverses are.” He’s supposed to.”
“You have a whole generation of users who are already familiar with and comfortable with Roblox technology, so Roblox has a clear advantage,” Lucas said. “The metaverse becomes just another opportunity to expand for these companies that have already been growing at such a rapid pace and are growing into different sectors.”
By using the metaverse as a catalyst, Lucas said, many companies would benefit, with notable peers including Activision Blizzard and
, the company behind “Fortnite”.
“But for us, the category killers end up being the companies that not only benefit but have a core business outside of this,” he said. While Unity has distinguished itself across many segments and dominates the industry, Roblox has a head start in monopolizing the “sub user space,” he said.
“They will continue to dominate the way they have been for years in various sectors, and it will broaden the listed sideline and potential market in which they can continue to grow,” Lucas said.
Cyber Security: Buy CrowdStrike and Zscaler
For cyber security stocks, Loukas is listed CrowdStrike And Zscaler as his favourite.
“Similar to what happened with Unity and Roblox, these companies were growing there, successfully building a customer base, and then the pandemic hit,” he said. He said that when work-from-home initiatives surged in March 2020, the cybersecurity industry started to gain more attention.
“The importance of cyber security has always been increasing, but you have these big events that draw attention to a secular trend that is already there,” Lucas said. “It’s a well-established trend that is fully connected to the idea of global digitization that is irreversible – we won’t back down.”
Lucas said CrowdStrike and Zscaler are both “very effective at what they do” but operate from two different angles: While CrowdStrike operates on the “periphery of the cloud,” Zscaler, a cloud-based cybersecurity company, operates at the “core.”
“They are two completely different types of cybersecurity and both are effective,” he concluded.