We recently published a list of Jim Cramer’s Top Picks: 10 Stocks to Buy and Sell. Since IONQ Inc (NYSE:IONQ) ranks 10th on the list, it deserves a deeper look.
Commenting on the aggressive rate cut by the Federal Reserve, Jim Cramer said in a latest program on CNBC that the “double” rate cut was needed for the economy and it would help the housing market, industrials and companies catering to the “less well-off” households.
“There really are two economies in this country. There is the one that needs lower interest rates because business is slowing and it’s harder to find a job and then there is one that says we don’t really care about where the stinking rates are. That’s who we can get a double rate cut today and still going lower.”
Cramer said he is currently in Silicon Valley and after talking to many companies, he feels tech companies do not care about interest rates since they are selling to businesses. Cramer said these technology companies are focused on innovation.
For this article, we picked 10 stocks Jim Cramer recently talked about during his latest programs on CNBC. With each company we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Hardware
IONQ Inc (NYSE:IONQ)
Number of Hedge Fund Investors: 12
When asked about quantum computing hardware and software company IONQ Inc (NYSE:IONQ), Jim Cramer said that he cannot recommend the stock because it’s losing too much money.
Cramer is right about IONQ Inc (NYSE:IONQ) losing money. While it has no debt and over $360 million in cash and marketable securities, it’s burning a lot of cash.
In the second quarter, IONQ Inc (NYSE:IONQ) generated just under $8 million in revenue but burned through more than $34 million in free cash flow. For every $1 of revenue, IonQ is spending $4 in cash, which is far from sustainable.
Quantum computing is a promising but capital-intensive industry with no promises of profits especially in the current volatile environment.
IONQ Inc (NYSE:IONQ) focuses on quantum computing, a cutting-edge technology that uses quantum mechanics to solve problems beyond the capabilities of traditional computers. The company is improving the accuracy and performance of its systems by increasing the fidelity of its qubits, the fundamental units of quantum information. By enhancing the fidelity of its barium qubits, IonQ aims to reduce errors and move closer to commercially viable quantum solutions.
IONQ Inc (NYSE:IONQ) has made notable progress in the commercial sector, surpassing revenue expectations and securing a significant contract with ARLIS, part of the U.S. national security apparatus. With innovations such as new error-correction techniques and ongoing improvements in qubit fidelity, IonQ is optimistic about reaching key milestones in quantum computing by 2025.
IONQ Inc (NYSE:IONQ) has increased its revenue outlook for 2024, but consistent profitability remains elusive, and scalable quantum computing is still a long-term objective. The stock is currently priced at 36x forward sales, down from over 50x earlier this year. But even at 34x, expectations are sky-high for a company that is far from profitable.
Overall, IONQ Inc (NYSE:IONQ) ranks 10th on Insider Monkey’s list titled Jim Cramer’s Top Picks: 10 Stocks to Buy and Sell. While we acknowledge the potential of IONQ Inc (NYSE:IONQ), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than IONQ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These Stocks.
Disclosure: None. This article is originally published at Insider Monkey.