Amazon.com CEO Jeff Bezos' audacious goal of one day
delivering customer orders via automated drones has inspired
to rethink science fiction as science possibility.
"The global marketplace is past the tipping point of adopting
robotics and automation, and all of the incorporation of this
technology up to now is only the beginning," Kevin Lane, chief
investment officer of Fusion Analytics Investment Partners in New
York, told IBD.
That helps explain theRobo-Stox Global Robotics &
Automation Index ETF 's (
) rapid growth to more than $84 million in assets in just three
months since its debut on the
ROBO has returned 5% since its inception on Oct. 22 vs. 3% for
theSPDR S&P 500 (
). But the market correction hasn't been kind to ROBO and its
holdings. ROBO is down 5% year to date while SPY has shed 3%.
The ETF created by Dallas-based Robo-Stox LLC contains 78 U.S
and foreign companies engaged in developing industrial and health
care robotics, 3D printing systems, consumer robotics, and
related software and parts.
"For many years, only heavy industrial businesses like car
manufacturers used robots and automation systems. These days,
robotic machines are revolutionizing a wide variety of
industries," Lane wrote. "Apple (
) plans to invest $11 billion in robotics and automation,
) has opened a robotics division and acquired seven companies to
build out that business."
ROBO has 36% of assets invested in U.S stocks, 25% in Japan,
7% in Germany, 7% in Taiwan, 5% Switzerland and micro-exposure to
10 other countries. The portfolio weights 40% of assets in
bellwether stocks, or the primary players in the industry, and
60% in non-bellwether companies that get a small amount of sales
Eighteen bellwether stocks are weighted 2% each, while the
rest are weighted 1% each. The U.S. bellwethers are3D Systems (
),AeroVironment (AVAV),Cognex (CGNX),Faro Technologies
(FARO),Intuitive Surgical (ISRG),iRobot (IRBT),Lincoln Electric
(LECO),Mako Surgical (MAKO),Oceaneering International (OII)
andRockwell Automation (ROK).
The portfolio is rebalanced and/or reconstituted quarterly. It
charges an annual management fee of 0.95% vs. 0.50% for ETFs on
Holdings With The Most Buzz
With much promise comes much risk. Shares of 3D Systems have
tumbled 28% year to date. The maker of revolutionary printers
that spit out three-dimensional objects cut its earnings guidance
for the fourth quarter owing to heavy investment in R&D,
manufacturing and marketing amid weak industrial and consumer
Credit Suisse analysts lowered their price target and rating
on the stock to neutral earlier this month. The silver lining is
that 3D Systems "highlighted that investment and market share
gains should drive organic growth of 'at least 30%' over the next
couple of years," Credit Suisse analyst Jonathan Shaffer and his
colleagues wrote in a client note Feb. 4.
That's a faster clip than rivalStratasys (SSYS), which expects
to see 25% organic revenue growth in '14.
S&P Capital IQ, on the other hand, maintained its buy
rating on expectations that 3D Systems' backlog will nearly
double in the coming years thanks to higher consumer and health
Rockwell Automation, down 5% year to date, beat fiscal Q1
earnings and sales forecasts and raised guidance for 2014. The
electrical equipment firm repurchased a million shares in Q1. It
still has $400 million of its $1 billion buyback program.
S&P Capital IQ issued a strong sell rating on Intuitive
Surgical, the maker of Da Vinci Surgical Systems and medical
instruments, in a Feb. 1 note. Shares have climbed 9% year to
date. "Negative press, U.S. hospital capital spending
constraints, the health care reform law, and the freed-up
capacity of existing robots will continue to pressure Intuitive's
U.S. systems sales," S&P Capital IQ analyst Phillip Seligman