The age of quantum computing is upon us. Best described as supercomputers, quantum computing technology is able to process vast amounts of data at speeds once thought unimaginable. Quantum computing stocks have the potential to revolutionize industries ranging from healthcare and prescription drug development to space exploration and artificial intelligence.
Right now, the most powerful quantum computers are controlled by a handful of leading technology companies. However, most industry experts and analysts say it won’t be long before the rest of us are experiencing the impacts of quantum computing in our everyday lives. By some estimates, the market for quantum computing is forecast to reach $125 billion a year by 2030.
Others peg it as a $1 trillion industry. Where we ultimately end up with quantum computing remains to be seen. But there’s no question that the industry will be a major catalyst for technology stocks moving forward. Here are the three most undervalued quantum computing stocks to buy now: June 2023.
This Maryland-based company that specializes in making quantum computing hardware and software has been on an incredible run this year. So far in 2023, IonQ’s (NYSE:IONQ) stock has gained 284%, outperforming just about every other technology security. While the year to date gains are eye popping, they come after a big downturn in IONQ stock. Founded in 2015 and still largely in start-up mode, IonQ’s share price is only 20% above its 2021 initial public offering price, and that’s after the big run over the last six months.
Still, IONQ stock is moving in the right direction and it still looks undervalued and like there is runway ahead for it despite the quantum leap the share price has experienced. IonQ is also technically a small-cap stock as its market capitalization is only $2.66 billion currently. The recent gains in the share price are due to the growing hype around AI, as well as improving financials and news of recently signed partnership agreements with technology giants Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN).
While IonQ remains unprofitable, its revenue growth is accelerating and its has $525 million in cash to help sustain it until it achieves profits.
Honeywell International (HON)
Honeywell International (NASDAQ:HON) likely isn’t the first name that comes to mind when thinking of quantum computing stocks. The industrial company that focuses primarily on aerospace products and building technologies, isn’t even really thought of as technology firm. Yet Honeywell has a quantum computing division called “Honeywell Quantum Solutions” that develops and commercializes quantum computing technologies. The company has said that it is pushing into quantum computing because it foresees a $1 trillion opportunity in the sector over the coming decades.
Honeywell’s quantum division currently has 400 employees and operations around the world, from Europe, to Asia and the U.S. Honeywell has also struck a deal with global banking giant HSBC (NYSE:HSBC) that will see the lender use Honeywell’s quantum computing power to analyze customer data. HON stock is down 4% on the year, has a comparatively low price-earnings (P/E) ratio of 26, and pays a quarterly dividend of $1.03 per share, which is good for a yield of 2%. While not a pure play tech stock, Honeywell is another way for investors to gain exposure to the fast-growing quantum computing space.
Legacy technology giant and household name IBM (NYSE:IBM) is a global leader in quantum computing. Earlier in June, the company published a study in the scientific journal Nature where its scientists claimed that they’ve made a long-awaited breakthrough that makes quantum computers as practical as conventional ones and paves the way for widespread adoption and use of the technology. To hear IBM scientists tell it, it likely won’t be long before we’re all using quantum computing power in our daily lives.
As it has for a long-time now, IBM stock continues to underperform the market. So far in 2023, IBM’s share price has declined 6% while the benchmark Nasdaq index is up 30%. The subpar performance can be attributed to a years long turnaround plan to reposition the company largely as a cloud computing firm. However, IBM remains focused on creating supercomputers through its quantum computing division. And the stock pays a generous dividend that yields nearly 5%, which is good for a quarterly payout of $1.66 a share.
On the date of publication, Joel Baglole held a long position in MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.