Humanity faces a number of major societal challenges in the next decades including climate change, pollution, aging demographics, and increasing income inequality. Economists and civic planners are increasingly focusing on smart cities as a potential solution to help mitigate and lessen the negative impacts of those issues. As a result, several smart city stocks are showing promise.
By using data, remote monitoring, artificial intelligence, and increased network connectivity, local governments and key stakeholders should be able to improve efficiency and generate better outcomes for citizens.
A big focus of this movement is in the Internet of Things (IoT) arena, which is to say putting more devices, applications, and logistical tools online so that key metrics can be monitored and managed in realtime. These smart cities stocks to buy are set to benefit as this theme gains more momentum.
Cisco Systems (CSCO)
Cisco Systems (NASDAQ:CSCO) is a leading communications technology company. Long-known for its internet networking gear, Cisco has evolved in recent years.
It has moved to a much more subscription-driven recurring revenue model. Increasingly, Cisco layers on higher value-added software and services such as cybersecurity on top of its networking gear.
This makes Cisco a key player in future smart city plans. It provides the networking backbone necessary to power fast reliable internet for all the smart vehicles, appliances, and remote monitoring applications needed to operate a next-generation city. In addition, Cisco’s software and cybersecurity solutions will help secure these future urban developments.
Cisco shares are a bargain here. While CSCO stock is currently out of favor, the underlying business is posting solid metrics. In its most recent quarter, Cisco grew total annualized recurring revenues 22% year-over-year to $29.2 billion. Additionally, its recent acquisition of Splunk offers Cisco an attractive quickly growing source of subscription revenues.
Gorilla Technology Group (GRRR)
Gorilla Technology Group (NASDAQ:GRRR) is a British technology company. It operates primarily in the video IoT and security convergence spaces.
Like many players in the smart cities arena, Gorilla Technology is a small firm that is currently unprofitable. It’s a higher-risk high-reward pick, and investors should consider GRRR stock accordingly.
That said, some analysts have suggested that Gorilla could have a breathtaking upside. Not only is it involved in the fast-growing IoT space, it could also benefit from the current AI investment cycle. And it has secured partnerships with large firms such as telecom firm BT Group (OTCMKTS:BTGOF).
Gorilla is unprofitable and doesn’t have a great balance sheet right now, so there is a dilution risk. That said, the company more than doubled revenues in 2023 versus 2022, and analysts see an additional 20%+ annualized growth over the next couple of years. That makes GRRR one of our intriguing smart city stocks.
Cepton (CPTN)
Cepton (NASDAQ:CPTN) provides lidar-based solutions for automotive, smart cities, smart spaces, and intelligent industrial applications.
The company offers a range of different lidar camera systems with all sorts of form factors to ideally suit various client needs.
CPTN stock has sunk over the past year amid the slowdown in the electric vehicle space. Traditionally, investors have associated lidar companies with EVs and little else.
However, that may be a mistake as lidar will be a piece of the broader digital revolution. Cities are already implementing lidar-based solutions to improve pedestrian safety at intersections and future implementations should include improved traffic management and efficiency as the technology continues to improve and become more affordable.
Cepton, for its part, is small and unprofitable. However, it is enjoying rapid growth. The company’s revenues jumped from just $2 million in 2020 to $13 million last year, and analysts see that rocketing to $21 million this year. That could make CPTN stock a cheap way to get in on the ground floor of this expanding opportunity. If you are looking for smart city stocks, start here.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
