Innovation Breeds True Market Leaders
If you’re searching for the next true market leader, it can be not easy to pinpoint one thing that they will all have in common. Because each cycle is different, different industries lead to different market cycles. However, the one constant is that industries that always lead are the ones that are innovating the most. In other words, their innovation leads to higher earnings, and their higher profits ultimately lead to higher stock prices. For this reason, investors must focus on up-and-coming technologies before the general public does. If you prepare ahead of time, you will build more conviction in these stocks when buying them. Below are 3 game-changing technologies that will lead to the stock market’s next big winners:
Internet of Things (IoT)
Imagine that everyday objects could talk to each other and you through the internet. As the name implies, the Internet of Things allows simple “things” such as your refrigerator, lights, or thermostat to talk with each other.
Stock to Watch:Samsara (IOT)
Samsara provides a wide variety of IOT solutions for businesses. Since going public in late 2021, Samsara has beaten Zacks Consensus Estimates for five straight quarters (+60% positive EPS surprise last quarter).
What’s driving earnings? One example of how Samsara is helping customers and driving revenue is its fleet management offering. Through GPS tracking and “smart geofencing,” Samsara helps clients like concrete produce Summit Materials (SUM) save money by avoiding traffic jams and optimizing routes. In fact, because of Samsara, Summit Materials saves $1.8 million annually in fuel costs.
Cloud Computing
Gone are the days of the floppy disk. Cloud computing allows individuals and businesses to access their data over the internet. Instead of having your own computer or server at home or at work store your data, you can remotely log into your cloud service and access your data from anywhere. Did you know that Amazon’s (AMZN) cloud offering (Amazon Web Services, or AWS) generates more profit than Amazon’s e-commerce store?
Stock to Watch: Alphabet (GOOGL)
If you’re looking for a stock with growth in the cloud space, your best bet is Google parent Alphabet. In the first quarter, Google Cloud revenue grew 28% to $7.5 billion while becoming profitable for the first time in its history. Meanwhile, Alphabet CEO Sundar Pichai said in April, “Over the past 3 years, annual deal volume has grown nearly 500%, with large deals over $250 million growing more than 300%.” Over the next two quarters, Zacks Consensus Estimates for GOOGL suggest healthy double-digit growth – not bad for a $1.6 trillion company.
Quantum Computing
Quantum computing is a unique, super-powerful computer that uses quantum mechanics to process information. While it’s complicated to understand, a quantum computer stores data in quantum bits rather than bits. Quantum bits allow quantum computers to perform complex calculations much faster than regular computers.
Stock to Watch: IonQ (IONQ)
IonQ is the only pure-play publicly traded quantum computing stock. The company’s website says, “The dawn of the quantum age is here. IonQ is developing quantum computers designed to solve the world’s most complex problems, and transform business, societies, and the planet for the better.” If successful, the payoff will be huge. IonQ will be able to simulate complex molecules, optimize logistics, and crack advanced encryption algorithms like never before.
While IonQ has yet to turn a profit, it has garnered attention from investors, rising more than 400% year-to-date. Investors should watch the stock but wait for a pullback before investing.
Conclusion
Technology is accelerating at a head-spinning rate. Innovations breed higher earnings, which eventually leads to higher stock prices. For this reason, investors should familiarize themselves with such innovations and build a level of conviction to exploit these opportunities in the future.
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
Alphabet Inc. (GOOGL): Free Stock Analysis Report
Summit Materials, Inc. (SUM): Free Stock Analysis Report
IonQ, Inc. (IONQ): Free Stock Analysis Report
Samsara Inc. (IOT): Free Stock Analysis Report
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This article originally appeared on Zacks
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