TipRanks: Here are top analysts' 3 favorite virtual reality stocks

Published Tue, Jul 25 201712:12 PM EDT

Harriet Lefton of TipRanks

TipRanks has identified the top analysts in technology coverage and found which virtual reality (VR) stocks they like the most. TipRanks uses a natural language-processing algorithm to rank analysts based on two factors: average return of buy-sell recommendations and success rate of buy-sell recommendations. TipRanks' stock screener identified the "best analyst consensus" stocks in the technology sector, revealing stocks with a "strong buy" best analyst consensus rating. TipRanks then combined that with a database scan to find the most popular virtual reality stocks by top analysts right now. Here are three favorite VR stocks from the best-performing technology analysts. 1. Facebook (FB) - this social media giant is a favorite stock of top analysts and a leader in the VR space. In the last three months, the stock has received 29 buy ratings and only 2 hold ratings. Meanwhile, even at the current $166 high share price the stock still has 6 percent upside potential. Top analysts say the stock can reach $175 over the next 12 months. Facebook snapped up virtual reality startup Oculus Rift for over $2 billion in 2014. It plans to launch a new headset in 2018, code-named "Pacific", that can operate without a computer or smartphone and will have its own app store. The proposed cost for this new device is $200. With this new offering, Facebook plans to bring VR headsets out of the video-game bubble and into the mass market. CEO Mark Zuckerberg revealed in January that Facebook is likely to invest about $3 billion in VR over the next decade. He has also acknowledged that it will take roughly another five to 10 years of development for VR to "get to where we all want it to go." 2. Alphabet Inc (GOOGL) - Twenty of the 24 top analysts that have rated GOOGL in the last three months are bullish on the stock. These analysts have a $1,068 average price target which translates into 7 percent upside from the current share price. Google is seriously investing in developing its VR technology. Researchers from its experimental and highly secretive Area 120 unit recently announced that they have developed a digital advertising format for VR apps. These ads could even be featured on Google's own VR headset, the Google Daydream View VR. However, the challenge will be not to make these gaze-activated ads too intrusive say the developers. Google has also just revealed that for the last two years it has been refining its Google Glass VR eyewear. The original $1,500 spectacles were discontinued in January 2015 because of weak consumer demand. Now the glasses have a much clearer focus. The new Glass Enterprise Edition model is intended specifically for businesses that would benefit from hands-free information access. Jay Kothari, Google's Glass project leader says there are already more than 50 businesses, including Boeing, Volkswagen, Dignity Health and DHL, using Glass to "complete their work faster and more easily than before." In fact, he says that DHL estimates that the glasses have increased supply chain efficiency by 15 percent. Order pickers use the glasses to scan for real-time instructions while moving goods to the shipping carts. 3. Micron Technology ( MU ) - MU has a "Strong Buy" analyst consensus rating with 15 buy ratings, 1 hold rating and 1 sell rating in the last three months. Shares in this semiconductor stock have soared 40 percent in the last six months, and analysts are confident that MU still has further room to grow. The top analyst average price target of $41 translates into 28 percent upside potential over the next 12 months. Micron is a key tech stock that will benefit from the move towards virtual reality. Micron manufactures DRAM (dynamic access memory) and NAND flash memory which are both key components of all VR technologies (as well as artificial intelligence, augmented reality and driverless cars). Micron is supplying both DRAM and NAND for Apple's upcoming iPhone 8, which will feature hardware to support augmented reality applications. Augmented reality, which combines VR with the real world, requires greater memory-chip densities, from four to six gigabytes, according to Micron. "With no negative catalysts on the horizon to change the favorable memory supply/demand dynamics, we reiterate our Buy rating and continue to recommend investors with a higher risk/reward tolerance take advantage of the recent pullback and buy the stock" wrote Loop Capital analyst Betsy Van Hees at the end of June. Her $40 price target suggests MU has 26 percent upside from the current share price. Editor's note: TipRanks is a fintech company that ranks analysts and financial bloggers based on their picks' performance. This piece highlights analysts with great track records who are not necessarily from the biggest firms.

David Paul Morris | Bloomberg | Getty Images

TipRanks has identified the top analysts in technology coverage and found which virtual reality (VR) stocks they like the most.

TipRanks uses a natural language-processing algorithm to rank analysts based on two factors: average return of buy-sell recommendations and success rate of buy-sell recommendations.

TipRanks' stock screener identified the "best analyst consensus" stocks in the technology sector, revealing stocks with a "strong buy" best analyst consensus rating. TipRanks then combined that with a database scan to find the most popular virtual reality stocks by top analysts right now.

Here are three favorite VR stocks from the best-performing technology analysts.