1 Growth Stock Down 59% to Buy Right Now

Do you like buying good stocks at discounted prices? Most investors do. After all, why pay more for a stock worth owning when you can pay less? The key, of course, is figuring out which stocks are worth buying and holding when they go on sale.

To that end, while not necessarily right for everyone’s portfolio, risk-tolerant growth investors may want to consider entering into a stake in computing technology. IonQ (IONQ 20.47%) while shares are still trading 59% below last September’s peak.

The stock appears to be testing the waters of a recovery, and it’s doing so for all the right reasons.

A whole new (and better) type of computing

Never heard of her? Don’t sweat. Most investors did not. The company has only been around since 2015 and has only been publicly traded since 2021. Its modest $2 billion market cap isn’t turning many heads either. Never mind its lack of profitability.

Give it some time though. IonQ is already where its industry is headed. It’s called quantum computing. Unlike the billions of digital zeros and ones that modern silicon-based computers typically handle, quantum computers use quantum particles — subatomic components of an atom — as the basis for handling complex digital tasks.

This approach uses the unique physical attributes of the particles in question, allowing (in oversimplified contrast with conventional computers) a quantum computer’s processor to calculate thousands of variables simultaneously. In turn, these platforms can process data many millions of times faster than the average home computer can.

This kind of computing power could prove revolutionary for industries such as drug development, cybersecurity and a wide range of artificial intelligence (AI) applications. And it’s not just a theoretical idea, mind you. IonQ already markets such systems, even as it continues to refine its technology.

The company achieved business of $11.4 million in the second quarter of 2024, up 106% year-over-year, as institutions wade deeper into the nascent quantum computing waters. IonQ also raised its full-year top line outlook to about $40 million, up from last year’s total sales of $22 million.

IONQ Revenue Data (Quarterly) by YCharts

IonQ is leading the charge

However, this only scratches the surface of what lies ahead.

Don’t hold your breath waiting for a home quantum computer. Not only are they impractical for everyday tasks like surfing the web or playing video games at several million dollars apiece, most are also too expensive for the average person to own.

But for institutions with higher-end needs and multimillion-dollar budgets, the prices for IonQ systems — or at least access to its technology — are now reasonably affordable. Most investors underestimate this accessibility, just as they underestimate how far along the company is in terms of commercial development.

For example, when it was unveiled in 2020, IonQ’s 32-qubit platform (that is, 32 different quantum particles simultaneously processing data) easily made it the world’s most powerful, yet practical, commercially available quantum computer at the time weather — an advantage the company undoubtedly has. I have not given up since then. IonQ also still believes it is on track to debut a commercially usable 64-qubit system sometime in 2025, which will again be a game-changer for the industry.

And these are not weak quantum particle systems, simply put together for the sake of boasting higher qubit numbers. These systems have been and are expected to continue to achieve 99.999% fidelity. In simple terms, fidelity can be thought of as a lack of computational errors within quantum computing systems that are not built around something as finitely binary as ones and zeroes.

Fidelity exceeding 99% is generally considered strong enough for such work, since this relatively small number of errors can be identified and then corrected by the system itself. The last bit of fidelity that the IonQ achieves on others is not, however, it is a bigger leap than it seems. They push their systems to the near perfection that paying customers would like to see and from their complex processing work.

And there is certainly a growing number of paying customers and partners. The University of Maryland recently made a $9 million investment in IonQ in exchange for expanded access to its technology through the National Quantum Lab in Maryland. In August, the company announced it would design a new system for the federal government’s Applied Research Laboratory for Information and Security (or ARLIS).

Kicker: IonQ is the only true “pure play” investment in the quantum computing space.

IonQ stock may not drop much further

It begs the question: If IonQ is such a game-changer, why is the stock struggling? Not only is it down 59% in the past year, but the stock is 77% below its late-2021 peak.

The answer is that most investors remain unfamiliar with quantum computing, just as they remain unfamiliar with the company driving this nascent market. The lack of profits doesn’t help much either.

It’s ok though. In fact, it is undoubtedly better for you. It means you can step in at what can be a bargain price before other people start connecting the dots and start bidding higher for this stock. In fact, stocks are acting like they might be ready to break out of the funk that dragged them to a new 52-week low last month.

If so, investors could see what the market research team at Precedence Research has been predicting for some time. This is a quantum computing market that will grow at an annual rate of 31% through 2034, turning a $1 billion market now into a market of over $16 billion at the end of the 10-year period. This outlook matches forecasts by McKinsey and SkyQuest. Given how powerful these computing systems already are, this is a plausible growth prospect.

Of course, make sure you are prepared for the above-average risk and above-average volatility that this ticker brings to the table along with its above-average potential.