money 10 Robotics Stocks That Will Own the Future
In this article we present the list of 10 Robotics Stocks That Will Own the Future. Click to skip to the very top stocks in this category and see the 5 Robotics Stocks That Will Own the Future.
Ambarella, Inc. (NASDAQ:AMBA), Teradyne, Inc. (NASDAQ:TER), and Emerson Electric Co. (NYSE:EMR) are a few of the robotic stocks that are poised to own the future as a wave of automation sweeps across most industries.
As labor shortages and increased labor costs continue to challenge companies’ bottom lines, they’re increasingly looking for ways to reduce costs, not to mention costly downtime. Worldwide spending on automation was expected to double between 2020 and 2025, and that’s likely just the tip of the iceberg. Various reports have the industry pegged to grow at close to a 10% CAGR through 2029, topping $400 billion in value by that time.
Automation not only reduces costs, but also improves productivity and quality control. McKinsey predicts that automation could boost global productivity by 0.8 to 1.4 percentage points annually, and that automation could effectively replace nearly half of the world’s salaried positions, which pay out $16 trillion in wages annually.
The automation sector serves a wide range of industries, a figure which is expected to grow as technologies improve and enhanced sensors and processes become capable of automating tasks that would’ve previously proved challenging.
The automotive industry accounts for about 29% of discrete automation demand, with heavy manufacturing and electronics accounting for similar market share. On the process automation side of the coin, the metals and mining industry has major demand for automation solutions, while the healthcare, pulp and paper, oil and gas, and chemicals sectors are becoming increasingly reliant on automation as well.
Despite its long-term growth potential, robotics stocks have not fared well in 2022, underperforming even the otherwise lousy broader market. After gaining more than 40% from the end of 2019 through the end of 2021, the Global X Robo Global Robotics & Automation ETF has lost 35% of its value this year, falling back near 2018 levels.
Given the economic downturn and the significant upfront costs involved in launching automated solutions, investors are fearful that cash-strapped companies will hold off on making investments in automation. This creates the perfect opportunity for forward-looking investors to buy into a promising industry at rock-bottom prices.
In this article, we’ll analyze ten robotics stocks that could make for compelling investments given their standing among some of the leading hedge funds in the world.
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Our Methodology
The following robotics stocks are ranked based on hedge fund sentiment. We follow a select group of hedge funds because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q2 2022 reporting period.
10 Robotics Stocks That Will Own the Future
10. ABB Ltd (NYSE:ABB)
Number of Hedge Fund Shareholders: 17
Ambarella, Inc. (NASDAQ:AMBA), Teradyne, Inc. (NASDAQ:TER), and Emerson Electric Co. (NYSE:EMR) are a few of the stocks that the smart money is betting on to lead the robotics revolution. The smart money also likes ABB Ltd (NYSE:ABB), which provides automation and electrification-based tools, which figures to be an area of long-term growth.
ABB’s Q2 revenue slumped by 2% to $7.25 billion, but that was due to an 8 percentage point hit the company took from the stronger U.S. dollar, as it does business all over the world. Orders were up 20% when discounting the F/X effects, to $8.81 billion, including growing by 33% in the Americas. ABB pays out a quarterly dividend, with its shares currently yielding 2.18%.
Hedge fund ownership of ABB Ltd (NYSE:ABB) has more than doubled since the end of 2020 and has held firm over the past two quarters even as the stock had started to run up against resistance. D E Shaw initiated a position of 1.88 million shares during Q2, while Ken Fisher’s Fisher Asset Management owns just over 20 million shares of the firm.
Artisan Partners chalked up ABB Ltd (NYSE:ABB)’s recent share price slide as being due to broader negative sentiment surrounding industrial companies, as revealed in the fund’s Q2 2022 investor letter:
“ABB Ltd (NYSE:ABB) is a Swiss-based industrial conglomerate that manufactures electronic products and equipment. There is no new significant fundamental news on the company. We believe the share price decline relates to negative sentiment associated with industrial companies.”
9. Omnicell, Inc. (NASDAQ:OMCL)
Number of Hedge Fund Shareholders: 18
Omnicell, Inc. (NASDAQ:OMCL) supplies analytics software and automation capabilities to the healthcare space. The company’s inventory management and automation systems can be used by health facilities to store, package, order, and issue medication, while its medication dispensing systems can be used by pharmacies and nurses to automate their workflow processes and reduce human error and waste.
Omnicell is predicting $1.4 billion in revenue this year at the midpoint of its guidance range, which would represent a 17% increase year-over-year. Given the company’s $1.25 billion backlog at the end of 2021, that guidance may even be slightly conservative. Given its strong customer retention rate (99%), Omnicell is poised to eventually transition from a product cycle company into one that thrives on higher-margin recurring services revenue.
Hedge fund ownership of Omnicell, Inc. (NASDAQ:OMCL) hit an all-time high at the end of Q1 before slumping by 31% in Q2. Anita Falicia and James Hillary’s Resolute Capital Asset Partners built a new stake in OMCL during Q1, but then unloaded it during Q2.
The Carillon Scout Small Cap Fund likes Omnicell, Inc. (NASDAQ:OMCL)’s suite of healthcare-based automation tools, as revealed in the fund’s Q1 2022 investor letter:
“Omnicell (NASDAQ:OMCL) provides an integrated suite of clinical infrastructure and workflow automation solutions for healthcare facilities. Cloud services have been a focus of the company and have shown good growth, automating many manual processes.”
8. Textron Inc. (NYSE:TXT)
Number of Hedge Fund Shareholders: 24
Industrial conglomerate Textron Inc. (NYSE:TXT) develops a wide range of products across various industries, building everything from golf carts, snowmobiles, and baggage tractors, to aerospace technologies and services, and advanced robotic land vehicles. Among the latter list is the firefighting robot Thermite and the M5 RIPSAW combat vehicle.
Textron Inc. (NYSE:TXT)’s revenue was flat year-over-year in Q2, with the company pulling in $3.2 billion in sales. EPS was up 23% year-over-year to $1.00. Aviation, Industrial, and Finance were the company’s best performing segments during the quarter, growing revenue by between 9.7% and 16.7%. Supply chain issues are expected to impact the company’s ability to make delivers this year, pushing some projected sales into 2023.
There was an all-time high in hedge fund ownership of Textron Inc. (NYSE:TXT) at the end of 2021, but the number of money managers long the stock has fallen by 29% in 2022. Gregg Moskowitz’s Interval Partners and Anand Parekh’s Alyeska Investment Management were two of the funds that sold off their TXT stakes during Q2.
7. UiPath Inc. (NYSE:PATH)
Number of Hedge Fund Shareholders: 25
UiPath Inc. (NYSE:PATH) supplies end-to-end automation platforms that allow customers to build complex automation processes through the UiPath Studio platform, and utilize machine learning models to further enhance their workflow productivity. The company also develops software robots that can work in tandem with custom-built automated processes to monitor tasks.
UiPath Inc. (NYSE:PATH) shares are down 69% this year despite the company posting solid Q2 results. It pulled in $242 million in sales during the quarter, nearly 10% about the company’s guidance, while its adjusted operating loss of $11.2 million was significantly better than the $55 million to $60 million loss the company was anticipating. The company’s annualized renewal run rate also surpassed $1 billion during the quarter for the first time.
Hedge funds showed strong interest in UiPath Inc. (NYSE:PATH) following its Q2 2021 IPO, but ownership of the stock tanked during the following quarter and has languished ever since. Cathie Wood’s ARK Investment Management has remained the company’s biggest bull since its IPO, owning 37.6 million PATH shares on June 30.
6. Rockwell Automation, Inc. (NYSE:ROK)
Number of Hedge Fund Shareholders: 28
Rockwell Automation, Inc. (NYSE:ROK) sells automation-based systems, software, and components across a range of industries, including energy, automotive, and food production. Supply chain issues impacted Rockwell’s ability to fulfill orders during its latest fiscal quarter, which has left the company with a record backlog. Yet despite the missed orders, the company still grew sales by double digits during its fiscal Q3. Rockwell also pays out a dividend, with shares currently yielding 1.93%.
Rockwell Automation, Inc. (NYSE:ROK) is yet another robotics stock that has fallen out of favor with top money managers in recent quarters, as there were 45% fewer funds long ROK on June 30 as there were two years earlier. Billionaire investing icons Israel Englander and Louis Bacon were some of the money managers who unloaded their stakes in the company during Q2.
The Harding Loevner Global Equity Fund is bullish on Rockwell Automation, Inc. (NYSE:ROK) given the pace of reshoring initiatives in the U.S., which has companies exploring ways to recreate their overseas cost savings through automation. The fund discussed its thoughts on Rockwell’s growth opportunity in its Q1 2022 investor letter:
“Rockwell Automation (NYSE:ROK) is one such provider, which we purchased during the market correction this quarter. The company—still based in Milwaukee, where it developed its first product, a device to control the speed of electric motors, 120 years ago—has a particular focus on North America. Rockwell’s sales growth had stalled during the US capex recession following the recovery from the Global Financial Crisis. The company sold sensors, actuators, valves, and control software, but lacked the ability to weave all these offerings together to provide a single control point for clients wanting to automate an existing plant or build a fully automated new one. Its 2018 minority investment in PTC Inc (NASDAQ:PTC), a Boston-based industrial software firm with a strong capability in augmented reality and visualization tools, marked a turning point in Rockwell’s fortunes. Through this partnership, Rockwell was able to develop software that integrated data from individual business segments, stitching it together on its “FactoryTalk” platform, to give managers a real-time digital picture of their operations. The company is now a chief enabler and beneficiary of reshoring initiatives as a wave of manufacturers scarred by pandemic supply chain disruptions look to automation to help them recreate some of the cost savings that had driven their offshoring in the first place. After hardly growing for seven years, the company saw orders increase 40% in the first quarter over the same period last year and predicted organic sales growth of between 14% and 17%.”
Ambarella, Inc. (NASDAQ:AMBA), Teradyne, Inc. (NASDAQ:TER), and Emerson Electric Co. (NYSE:EMR) are some of the top robotics stocks that the smart money is buying. See why by clicking the link below.
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Disclosure: None. 10 Robotics Stocks That Will Own the Future is originally published at Insider Monkey.
