While robots in the past were primarily used in industrial applications, robotics are now used for security, healthcare, aerospace, food and beverage, and education. More and more industries are starting to rely on automation to dramatically improve their efficiency. Amid these advances, market research analysts have forecast the robotics market to reach $214.7 billion by 2030, growing at a compound annual growth rate (CAGR) of nearly 23%.
With such a growing investment opportunity, robot and automation stocks, represented by the ROBO Global Robotics and Automation Index ETF (ROBO), an exchange-traded fund (ETF), outperformed the broader market. The ETF has generated a total return of 5% over the past 12 months, outpacing the relatively flat performance of the S&P 500 Index, up 0.3% over the same period.
Here are the top three robotics stocks in each category: Best Value, Fastest Growing and Most Dynamic. The market performance figures above and all company stock price data in the tables below are as of April 24, 2023.
Best Value Robotics Stocks
These are the robotics stocks with the lowest 12-month price-to-earnings (P/E) ratio. Since profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you are paying less for every dollar of profit generated.
But these stocks could also turn out to be a classic case of a value trapa stock that attracts investors looking for a bargain because it looks inexpensive, relative to the stock’s historical valuation multiples or relative to its industry peers, but which may continue to languish or fall. further after an investor buys shares of the company.
Azenta Inc.:Renamed Brooks Life Sciences Services and Products, Azenta provides analytical, procurement, logistics and IT services for scientific sample exploration and management. Azentas’ P/E ratio reflects slowing organic revenue growth, which declined 1% year-over-year in the first quarter of 2023. At the same time, Azenta announced a accelerated share buyback worth $500 million to be completed by the end of the third quarter, signaling that stocks may be undervalued at these levels.
Qualcomm Inc.:A global semiconductor and telecommunications company that designs and markets wireless communications products and services. Despite its size, Qualcomm is not immune to macroeconomic stress, with first-quarter revenue down 12% and pretax profit down 39% year-on-year.
Deere & Co.:The company is a world leader in the production of equipment related to agriculture as well as construction, forestry, earthmoving and lawn/turf maintenance. It also has a wide range of digital products that ensure the accessibility and monitoring of customer machines. Strong demand, leading to higher shipments and realized prices, drove Deere to post year-over-year net sales up 34% and earnings per share (EPS) that jumped 124% for the first fiscal quarter. Deere forecast its 2023 net income to be between $8.75 billion and $9.25 billion, compared to $7.1 billion in 2022.
Fastest Growing Robotics Stocks
These are the top robotics stocks ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly growth as a percentage of year-over-year revenue and the most recent quarterly year-over-year (EPS) growth.
Sales and profits are critical factors in the success of a business. Therefore, ranking companies on a single measure of growth makes a ranking sensitive to accounting anomalies in that quarter (such as changes in tax laws or restructuring costs) that may render either number unrepresentative of the business in general. Companies with quarterly EPS or revenue growth greater than 2,500% were excluded as outliers.
ServiceNow Inc.:ServiceNow is a cloud solutions provider whose platform helps businesses manage their workflows. Despite macroeconomic headwinds, ServiceNow ended the first quarter of 2023 with $2 billion in subscription revenue, up 24% year-over-year, and saw 20% customer growth compared to the quarter of the previous year. Additionally, ServiceNow projects that 2023 revenue will grow 23% over previous years.
Aptiv PLC:Aptiv designs and produces automotive parts with 131 manufacturing facilities and a presence in 48 countries focusing on connectivity, safety and environmental sustainability in its vehicle components. Even with supply chain disruptions and macroeconomic uncertainty, the company grew revenue by 12% year-over-year in 2022, while adjusted operating margins fell from 8.8 % to 9.1%. Growth is expected to continue in 2023, with the company estimating revenue of $18.7-19.3 billion, an increase of 7-10%.
Robotics stocks with the most momentum
Robotics stocks have had the highest total return over the past 12 months.
Samsara Inc.:An American Internet of Things (IOT) company, the Samsaras platform enables customers to manage their vehicle fleets, monitor equipment, and site visibility and workflows. Samara ended its 2023 fiscal year with $795 million in annual recurring revenue, up 42% year-over-year, and an operating loss that narrowed to $260 million from a loss of operating of $354 million in fiscal year 2022.
National Instruments Corp.: National Instruments is an American company that manufactures automated test equipment and virtual instrumentation software. As reported on April 12, Emerson Electric has agreed to buy National Instruments for $8.2 billion in an all-cash offer of $60 per share, representing a nearly 50% premium to at the National Instruments closing price on January 12, the day before National Instruments. announced a strategic review. National Instruments’ first-quarter 2023 revenue grew 13% year-over-year and the company said it continues to clear its backlog of backlogs as pressures on the chain supplies were diminishing.
Cadence Design Systems Inc.:Cadence Design Systems produces software, hardware and silicone structures used in the design of electronic systems. In its first quarter 2023 earnings report, Cadence forecast revenue of approximately $4 billion for this fiscal year, up 12% from $3.5 billion in fiscal 2022, and margins of operating for 2023 by around 30%, similar to last year’s result.
Key trends in robotics
As wage pressures squeeze corporate margins, companies in various industries are increasing their bets on automation, like robotics, to drive future profits. A survey by global consulting firm McKinsey & Co. shows that logistics and fulfillment players, as a percentage of their total capital spend, will be the biggest spenders on automation over the next five years, followed by companies in the automotive and life sciences sectors. and the healthcare, and food and beverage sectors. This expansion is likely to lead to increased equity investment opportunities as more companies launch or begin supplying robotic equipment.
The processes most likely to be automated are those used in logistics and warehousing such as palletizing and packing, material handling, receiving goods and sorting. Jobs that require high levels of human intervention, such as welding and soldering, are the least likely to be automated. Either way, the future seems to be machine-driven, and most companies are anticipating the adoption of robotics to improve safety, quality, and production speed. Companies that can provide such systems will benefit.
Risks associated with robotic actions
There are at least two risks to consider before investing in robotics stocks: competition and company valuations. Market sectors like this that are primed for growth offer potential for investment but tend to experience higher rates of competition. And the competition can be deadly, especially for new startups that lack the capital and resources of more established companies.
The other major risk factor associated with robotics stocks is high company valuations. The robotics industry is on an upward trajectory and the market has reacted to this. Like many other tech stocks, robotics stocks can be expensive, due to the higher valuations associated with the companies.
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