Investing in smart cities stocks offers opportunities for investors to take advantage of the growing global trend towards sustainable urbanization. As smart cities are designed to improve their inhabitants quality of life through the use of technology, there are many tech and tech-adjacent companies set to gain from the expansion of this new modern way of living. Companies positioned for potential growth include those that provide technologies for efficient transportation, sustainable energy and smart infrastructure.
The companies that supply the necessary software and hardware for smart city projects to thrive are using the latest advances in artificial intelligence (), the Internet of Things (IoT) and green energy to make cities more useful and sustainable. This makes investing in smart cities stocks particularly advantageous as they widely overlap with overarching market trends. Investors can buy into companies that are market leaders and add to an already bullish investment plan.
As cities around the world embrace digital transformation, smart cities stocks represent a promising sector for investors seeking exposure to the future of urban living and innovation. Here are three top companies on the forefront of urban development and technology that investors should consider.
Qualcomm (NASDAQ:QCOM), a prominent player in the telecommunications industry, is playing a crucial role in the development of smart cities. Its biggest contribution is via 5G, which supports wireless infrastructure, public safety and the efficient use of energy. Thanks to its high speeds, low latency and increased capacity, 5G enables the most value-driven features of smart cities to take shape. Qualcomm’s devices like the Snapdragon X35 5G Modem-RF System and its partnerships with major telecommunication providers have allowed it to integrate its 5G offering into smart cities, making it a perfect example of one of best smart cities stocks right now.
There are some good reasons why investors should consider QCOM stock if trying to enter the smart cities sector. Its trailing price-to-earnings (P/E) ratio is significantly higher than its forward P/E, which suggests that analysts think the company is currently undervalued and has room for growth. Furthermore, Wall Street rates QCOM as a buy, and some analysts predict that its share price could rise to $155 within the next 12 months.
Cisco Systems (CSCO)
Cisco Systems (NASDAQ:CSCO) actively engages in the development of smart city infrastructure, offering comprehensive solutions in areas like IoT, cybersecurity and advanced data centers. Offering a 3.09% dividend yield with consistent dividend growth since 2016, Cisco is also a favorite dividend stock for investors looking to add a tech name to their portfolios.
Cisco provides specific products for the management of smart cities including Cisco Kinetic, which operates as a cloud-based console for city managers. Users can view the flow of data from the city as well as manage the city’s smart services in real time. Cisco’s other product lines aimed towards smart cities include applications for traffic planning, public Wi-Fi, video surveillance and more. With such a robust set of offerings, it is clear why CSCO is one of the top smart cities stocks right now.
The company’s recently released quarterly results were also attractive. Its revenues grew 8% year-over-year (YOY), while its earnings per share ( ) surged by 37%. It also issued strong forward guidance for the rest of fiscal year 2024 and has signaled it will continue to deliver value back to shareholders through dividends and buybacks.
Honeywell (NASDAQ:HON) offers technologies that have a range of uses in smart cities, including automation, transport and infrastructure. The company is also very well-known for developing quantum computing services, and some analysts view it as an emerging market leader in that space.
The Honeywell City Suite offers a collection of products and services designed to optimize urban operations. Using an IoT command and control platform that allows administrators to view and manage the full spectrum of the city’s smart operations, the Honeywell City Suite can enhance citizen engagement, enhance public systems and expedite emergency service delivery.
Wall Street is also bullish on HON stock’s future prospects. For the next 12 months, the analyst consensus rating for the stock is buy. Appealingly, this rating also comes with an anticipated 5% rise in its stock price, a 5.5% increase in revenue and an 8.9% rise in EPS. A household name both literally and figuratively, Honeywell is another smart choice for investors interested in smart cities stocks.
On the date of publication, Matthew Farley did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.