Quantcast

20 Automation Stocks for the Revolution in Robotics


Shutterstock photo

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

With automated technologies, the domain of fantasy and science-fiction is steadily becoming not only reality, it's becoming the new norm. The robotic revolution has dramatically altered the economic landscape, driving productivity primarily in manufacturing and in many other sectors. As a result, automation stocks are virtual necessities for your portfolio.

This isn't merely marketing hype. MIT Technology Review used the phrase "relentless pace"  to describe the robotic industry's impact on the economy. Primarily, automated tech and the related artificial-intelligence industry will completely overturn centuries-long platforms. Thanks to innovations from companies like Uber , the automotive sector will finally earn its namesake.

As CMO.com revealed, interest in automation tech has spiked in recent years. Nearly half of companies surveyed in a marketing study revealed that they utilize automated tech for marketing purposes . Among business-to-business (B2B) establishments, this metric jumps to 55%.

The benefits for automation providers, and by logical deduction, automation stocks, are obvious: namely, they offer incredible productivity boosts, and lower overhead (ie. no salaries nor benefits). But with every innovation comes consequences. This involves not only the massive number of jobs lost to automated tech, but also, the investment in training and education to best utilize it.

It's a complicated world, to be sure. Nevertheless, the vibrancy and dynamism involved in the automated industry prove that this market is still in its early stages. Here are 20 automation stocks to advantage this game-changing market:

Automation Stocks for the Robotics Revolution: Emerson Electric (EMR)

Multinational engineering firm Emerson Electric 's (NYSE: EMR ) roots go back to the late 19th century. But despite being one of the oldest publicly traded companies, that hasn't prevented EMR from embracing next-generation technologies. Its footprint extends out to multiple industries, and EMR offers services in the most granular details up to macro-level advancements.

Those looking for large-scale automation stocks should consider EMR and its stable financials. A particular highlight is the engineering firm's profitability margins , which rank very highly compared to its competitors. In recent years, management has focused on reducing expenses to help offset slowing revenues. However, in its last reporting quarter, sales jumped 19% year-over-year to $4.25 billion.

Technically, EMR stock is currently stuck in a consolidation phase, with shares up a pedestrian 1.6% year-to-date. Given the underlying sentiment for its industry, though, I view this underperformance as a long-term opportunity.

Automation Stocks for the Robotics Revolution: Honeywell (HON)

Earlier this month, I featured multi-faceted industrial powerhouse Honeywell (NYSE: HON ) as both an Internet of Things (IoT) and Industrial Internet of Things (IIoT) opportunity. In this age of nimble, net and tech-savvy companies, the concept of a jack-of-all-trades behemoth seems anachronistic and irrelevant. However, Honeywell does complicated right.

After a very solid earnings report in which Honeywell beat earnings per share expectations and increased the top line by over 8% YOY, my idea feels very much justified. If you're just getting wind of this opportunity, you might be dissuaded from it due to recent momentum. After all, HON stock isn't known for its rip-roaring, nearer-term performances.

That said, Honeywell is committed to offering automated technologies across almost every facet of life. From smart thermometers to satellite communications, automation is in its blood. More importantly, its fiscal stability helps ensure that you won't be left holding the bag.

Automation Stocks for the Robotics Revolution: Teradyne (TER)

Among automation stocks, few have the lofty reputation and credibility of Teradyne (NYSE: TER ). Specializing in automatic test equipment, Teradyne provides comprehensive analyses on semiconductors and complex electronic systems. TER clients read like a who's who among elite companies, including Apple (NASDAQ: AAPL ), Lockheed Martin (NYSE: LMT ) and Agilent Technologies (NYSE: A ), among many others.

Better yet, Teradyne is an organization that's on the rise after suffering a choppy year in the markets. Management produced outstanding results for its second-quarter earnings, beating both profitability and revenue targets. With the latest results, Teradyne maintains firm dominance in operating and net margins, as well as double-digit trailing-three year revenue and EPS growth .

On a YTD basis, TER stock is still in negative territory, down 1.3%. Do note, though, that shares have jumped over 32% since late April. This is an ideal time to consider a robust organization that the markets are temporarily discounting.

Automation Stocks for the Robotics Revolution: Siemens (SIEGY)

Another titan among automation stocks, Siemens (OTCMKTS: SIEGY ) is one of the largest engineering and technology firms in the world. It offers services and solutions in multiple industries, particularly in energy management and infrastructural systems. Siemens also levers a digital factory division, which is designed to greatly improve manufacturing efficiencies.

From an investment perspective, a key highlight for SIEGY stock is its solid financials. Both operating and net margins are within the upper-third of the global-diversified industrials sector. Siemens also generates strong annual revenue growth relative to its peers. Also, on a valuation scale, SIEGY is on discount, priced at less than 15 times trailing earnings.

However, in the markets, SIEGY hasn't exactly torn it up. For the year, shares are barely above parity. Also, as an over-the-counter offering, volume levels aren't that great. Still, Siemens is one of the top names among automation stocks. It definitely has a chance to be a sleeper hit.

Automation Stocks for the Robotics Revolution: Cognex (CGNX)

The next step in the automated-tech revolution is artificial intelligence (AI). We already live in a world where machines do our bidding. Eventually, the machines (for better or for worse) will require less of our input. But to further this pursuit requires advancements in machine vision, which is Cognex's  (NASDAQ: CGNX ) primary specialty.

The tremendous demand for this automated-tech subcategory is enough reason to consider CGNX. But another major impetus is its financials, which are simply top notch. Cognex's balance sheet is one of the best among automation stocks, with a key highlight being zero debt . In addition, CGNX has class-leading profitability margins, as well as double-digit annual revenue and EPS growth.

Another selling point is its contrarian posture. CGNX stock is down sharply for the year, shedding 26% YTD. However, the negativity has decelerated significantly over the past several weeks. This is a prime opportunity to acquire a fundamentally robust organization at a steep discount.

Automation Stocks for the Robotics Revolution: Middleby (MIDD)

Although, most lists featuring automation stocks focus on the large-scale technological aspect, automation doesn't have to be so grand. Indeed, something mundane like kitchenware and appliances can benefit from the robotics revolution. Middleby (NASDAQ: MIDD ) proves this point with their renowned lineup of automated-cooking solutions.

As with the aforementioned Cognex, a significant incentive to consider MIDD stock is its underlying financials. Middleby has very strong operating and net margins, beating out most of its competitors. Moreover, the company benefits from double-digit annual revenue and EPS growth. This trend has maintained itself into the last reporting quarter, where MIDD boosted sales to $585 million, up 10% YOY.

Unfortunately, the markets don't seem to care for MIDD stock. On a YTD basis, shares have lost nearly 26%. But with the comprehensive benefits associated with the robotics revolution, MIDD is an underappreciated opportunity.

Automation Stocks for the Robotics Revolution: Oceaneering International (OII)

A key factor in the long-term success of automation stocks is synergy. The overused buzzword happens to perfectly describe Oceaneering International's  (NYSE: OII ) business model, which specializes in subsea engineering technologies. With their extensive expertise, OII markets their services and solutions to oil and energy companies, as well as government agencies.

On one side, the benefit for Oceaneering's clients is economies of scale. Rather than investing steeply for ground-up, in-house platforms, they can turn to OII for expert, ready solutions. On the flipside, OII benefits from the potential of recurring revenue streams.

Having said that, OII is a very risky play due to its oil and gas market exposure. Since the energy sector collapsed in 2014, Oceaneering has suffered sharp revenue declines. It's only just recently that the sector has sparked a resurgence.

Clearly, the Street believes in the recovery story, with OII stock up 27%. If you can stomach the potential volatility, a little bit of patience could offer up a surprise.

Automation Stocks for the Robotics Revolution: ABB (ABB)

A Swedish-Swiss multinational firm, ABB (NYSE: ABB ) specializes in advanced robotics technologies. Their products and services are recognized all over the globe, making ABB one of the elite picks among automation stocks. Moreover, their recent ventures into water-cleaning solutions and their sponsorship of Formula E races highlight their relevancy.

Overall, sound financials back ABB stock. Notable metrics include their operating and net margins, which are both above average for global industrials. In addition, the company offers a generous 3.6% dividend yield, which is a big plus in the current market situation.

That said, ABB stock hasn't enjoyed market success this year, with shares succumbing to a 15.4% loss YTD. Over the past three years, sales growth has flatlined, discouraging shareholders.

But in its most recent quarter, ABB started turning things around with an $8.9 billion revenue haul, up 5% YOY. It's risky, but ABB has the appearance of a "buy the blood on the streets" opportunity.

Automation Stocks for the Robotics Revolution: Rockwell Automation (ROK)

With a name like Rockwell Automation (NYSE: ROK ), it'd be a small crime not to include ROK on my list of automation stocks. Of course, I like Rockwell for more than just their branding. With a market capitalization just north of $23 billion and a leading expert in smart manufacturing, its prospects look bright.

That sentiment received a credibility boost after Rockwell posted its Q3 earnings result. The company beat EPS consensus estimates, while revenues were in line with expectations. But the biggest takeaway was management raising guidance for the year due to a favorable global-manufacturing environment.

So far, the markets haven't responded well to ROK stock, with shares down more than 6% YTD. I expect that to change not only because of the earnings beat, but the sentiment within the industry. Automation is already a gamechanger, but it appears the markets will finally recognize it as such.

Automation Stocks for the Robotics Revolution: Brooks Automation (BRKS)

Brooks Automation (NASDAQ: BRKS ) is a specialty tech firm with an expertise towards semiconductor processes and equipment. They also specialize in advanced sectors such as cryogenics , and large-scale vacuum chambers designed for space-flight simulations.

As with the other automation stocks on this list, Brooks' financial standing plays a pivotal role in its investment potential. The company maintains a solid balance sheet, with comparatively reasonable debt levels. It also features above-average profitability margins, as well as double-digit revenue growth over the trailing three years.

Notably, Brooks enjoyed a stellar performance in its last reporting quarter, boosting revenue to over $207 million, up 22% YOY.

Market performance for BRKS reflects the positive sentiment that was generated in its last earnings report. Shares are up over 26% YTD, so Brooks isn't necessarily a discounted opportunity. Still, with the broader automated-tech industry receiving positive coverage, BRKS has upside remaining.

Automation Stocks for the Robotics Revolution: Control4 (CTRL)

Too often, the term automation is associated with the titans of industry. By no means is this a misnomer; however, covers virtually sectors, including those that impact our everyday lives. Control4 (NASDAQ: CTRL ) is a perfect example of this dynamic, which specializes in smart-home automation services.

"Smarthomes" is a concept that's virtually guaranteed to increase in scope, so CTRL appears a no-brainer. This assumption receives further credibility when you consider its financials. Control4 has zero debt on its books, which affords it flexibility in pursuing future innovations. As a whole, the company also features respectable profitability margins, and strong, double-digit revenue growth.

Where CTRL doesn't shine is in the markets. Currently, shares are down over 18% YTD. I think this is an overreaction to earlier bearishness towards automation stocks. But Control4's competitors have demonstrated segment growth recently, so don't expect CTRL to remain deflated indefinitely.

Automation Stocks for the Robotics Revolution: KUKA (KUKAY)

To many folks, KUKA (OTCMKTS: KUKAY ) probably sounds like either a tropical drink or the revelation of a wardrobe malfunction. But in reality, it's one of the most influential automation competitors available for equity trading. KUKA's main specialty is industrial robotics, which makes it a key player in the automotive and transportation markets.

One of the biggest drawbacks to investing in KUKAY stock is that it's traded in the pink sheets. Obviously, this low-level exchange doesn't have the greatest reputation. But if you can overlook this factor, you'll see that KUKAY is far above the speculative fare that's often associated with the pinkies. The company has overall solid financials, with a key highlight being strong revenue growth that has maintained up to its last reporting quarter.

Similar to this year's plight among automation stocks, KUKAY is down 26% YTD. But given returning positive sentiment towards this sector, KUKAY is a viable, contrarian bet.

Automation Stocks for the Robotics Revolution: Intuitive Surgical (ISRG)

The investment potential for Intuitive Surgical (NASDAQ: ISRG ) is patently - and scarily - obvious. In May, I wrote the following :

"According to a 2016 BMJ report, medical errors may represent the  third-leading cause  of death in the U.S. Due to unobserved or underreported incidents, medical errors are likely much higher than prior, conservative estimates. Based on the latest study, mistakes account for 251,454 deaths annually."

With Intuitive Surgical's da Vanci Surgical System, such horror cases should be reduced in a hurry. But let's not just focus on the negatives; precision, automated surgical tools can also open the doors to methods that are currently unavailable to mere mortal hands.

Better yet, ISRG's financials reflect growing traction towards their innovative solutions. In its recently-reported Q2 results, management disclosed a significant boost in recurring revenues . In fact, 71% of total revenues are now the recurring kind. This helps ease the volatility associated with one-off, medical-equipment sales.

The one drawback to ISRG stock is that everyone's buying into the storyline. On a YTD basis, shares are up a scorching 47%. But if you have a long-term outlook, ISRG still has legs to run higher.

Automation Stocks for the Robotics Revolution: Ekso Bionics (EKSO)

Increasingly, automated technologies won't just refer to platforms that we utilize; instead, we'll eventually discuss how we integrate them to our physical selves. Sounds like science-fiction, you say? Just check out Ekso Bionics (NASDAQ: EKSO ), which is a leading manufacturer of powered-exoskeleton devices.

Comedian Chris Rock isn't primarily known for his investment advice. Yet he was spot on when he criticized the medical establishment in his HBO television special, "Bigger and Blacker." Despite all the technological advancements forwarded, the only thing we have for paralysis patients is a chair.

No more. With Ekso Bionics power-assisted devices, mobility-impaired individuals can finally stand up and walk . It's a remarkable paradigm-shift and Ekso Bionics is committed to further pushing the envelope.

With that said, EKSO is similar to a speculative biotech firm in that it's an all-or-nothing affair. Its financials aren't that great, and shares are down over 9% YTD. But if you want a low-share price gamble in this automation sector, take a good look at EKSO.

Automation Stocks for the Robotics Revolution: Cyberdyne (CYBQY)

Ordinarily, competition is viewed as a negative. However, with automation stocks, additional competitors provide legitimacy to the target sector. This is the case for Cyberdyne (OTCMKTS: CYBQY ), a Japanese tech firm that specializes in exo-suits. Known as HAL, or Hybrid Assistive Limb , these are incredibly stylish power-assisted devices designed for either medical purposes, or to improve manual-labor efficiencies.

But as Ekso Bionics demonstrated, the ex-suit market isn't the most financially stable. But with CYBQY, you get a little bit more robustness, especially in the no-debt balance sheet. Also, Cyberdyne has delivered outstanding three-year revenue growth. However, the company suffers from negative earnings, and its recent sales growth rate has flatlined.

Is CYBQY stock worth it? I wouldn't take out a second mortgage, obviously, because the industry is young and still has much to prove. But Cyberdyne's in-house innovations makes this an intriguing gamble - just play responsibly.

Automation Stocks for the Robotics Revolution: Fanuc (FANUY)

Although it's not necessarily a household name, Fanuc's  (OTCMKTS: FANUY ) innovations have likely impacted your life in one form or another. One of Japan's leading manufacturers, Fanuc specializes in smart robotics designed for factory work. They're also a top provider of automated-CNC machinery.

Because FANUY shares trade on the pink sheets, they don't receive much coverage stateside. That works out to your benefit because Fanuc is a hidden gem. This is a company with a $38 billion market cap, and one with a very strong balance sheet. Moreover, Fanuc features top-notch profitability margins and a sales trend that has been growing dramatically over the past two years.

However, being a pink-sheet stock, and due to earlier pressures among automation stocks, FANUY suffered in the markets this year. Shares are down more than 22% YTD, which makes this a risky investment. That said, the rate of decline has diminished significantly. Further, Fanuc is really a blue chip that few know about.

Automation Stocks for the Robotics Revolution: Omron (OMRNY)

Omron (OTCMKTS: OMRNY ) is most commonly known in the U.S. for its personal medical devices, such as its blood-pressure monitor. Their products superb functionality, intuitiveness, and quality craftsmanship have earned the company a superior reputation. However, they also specialize in many other businesses, including industrial and mobile robots, and machine-automation controllers.

As with Fanuc, Omron is fundamentally a hidden gem. It has no debt on its books, which is a rarity for an electronic-component manufacturer. Omron also features very solid profitability margins, as well as sharply rising revenue over the past two years. In its most recent quarter, the firm delivered $2.2 billion in sales, up 11% YOY.

Following the common theme among several automation stocks, OMRNY has suffered a miscue in 2018. On a YTD basis, shares have dropped 23%. At the same time, Omron appears to have stopped the bleeding earlier this month. It's a risk, but one that appears to be worth the trouble.

Automation Stocks for the Robotics Revolution: Yaskawa (YASKY)

With most publicly-traded Japanese companies listing their equity on over-the-counter exchanges, American investors largely overlook them. That hasn't always been a bad thing, as the Japanese economy hasn't gained traction until recently. But with automation stocks, the situation is completely different: ignoring Japan is an opportunity cost.

Just take a look at Yaskawa (OTCMKTS: YASKY ). This manufacturing firm develops smart-industrial robots, along with a host of engineering products serving multiple industries. But what makes Yaskawa stand out from its more popular western counterparts is the financials. YASKY receives high grades for financial strength, profitability, and growth. Specifically, management has focused on reducing debt loads, while revenues launched skyward in the most recent quarter.

Like the others, YASKY incurred a steep drop in the markets that have only now subsided. But this might be a perfect time to advantage an underappreciated company in a burgeoning industry.

Automation Stocks for the Robotics Revolution: Global Robotics and Automation Index ETF (ROBO)

The myriad of choices among automation stocks can be overwhelming. Additionally, the automation industry, as we discussed previously, isn't just limited to one specific sector. To cover your bases in this diverse field, an exchange-traded fund offers a balance between profitability potential and downside protection.

The Global Robotics and Automation Index ETF (NYSEARCA: ROBO ) is a popular choice for conservative investors. Among its top holdings are several of the individual names featured on this list. Moreover, it includes Japanese robotics firms like Fanuc, which are fundamentally sound but underappreciated opportunities.

The ROBO portfolio covers multiple sectors, with technology and industrials taking top billing. However, the fund also features meaningful exposure to healthcare and consumer-cyclical markets.

Automation Stocks for the Robotics Revolution: Global X Robotics & Artificial Intelligence Thematic ETF (BOTZ)

If you're looking for an automation fund with a Japanese twist, then Global X Robotics & Artificial Intelligence Thematic ETF (NYSEARCA: BOTZ ) is your go-to pick. I say this because out of the ETF's top-ten holdings, six of the companies originate from Japan.

Another key difference is that BOTZ features significant coverage in healthcare . That's not surprising considering that Omron is one of the top holdings of this ETF, with a 4.2% weighting.

In terms of performance, I expect BOTZ to offer a little more upside than ROBO. The majority (43%) of this fund's companies are Japanese, while 35% are American. But because of the international balance, BOTZ is a tad bit riskier. Think of it as an automated ETF with a dash of spice.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.

Compare Brokers

The post 20 Automation Stocks for the Revolution in Robotics appeared first on InvestorPlace .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Stocks
Referenced Symbols: EMR , HON , TER , SIEGY , CGNX



More from InvestorPlace Media

Subscribe






InvestorPlace Media
Contributor:

InvestorPlace Media

Investing, Financial News










Research Brokers before you trade

Want to trade FX?