Over the next decade, the robotics industry is likely to have a big impact on economic output and productivity. Be it industrial automation, construction, mobility or healthy, robotics will provide increased efficiency and accuracy. With plenty of growth to come, it’s a good time to look at some of the top robotics stocks to buy.
To elaborate on the industry’s potential, the global robotics market was worth $25 billion in 2021. Boston Consulting Group expects the market size to swell to $160 to $260 billion by 2030. Of this, industrial robotics is likely to be worth $60.6 billion.
If these estimates hold true, stocks of some of the best robotics companies will be big-time value creators. I expect multi-bagger returns from some of the best robotics stocks over a period of five years.
This column will discuss three robotics stocks to buy that seem to be best positioned to benefit from these tailwinds.
| PATH | UiPath | $16.08 |
| ISRG | Intuitive Surgical | $327.61 |
| ROK | Rockwell Automation | $314.98 |
UiPath (PATH)
UiPath (NYSE:PATH) is a provider of robotic process automation solutions. PATH stock looks attractive, after trading sideways over the last 12 months. I expect a big breakout to the upside, as the company delivers strong numbers.
For Q1 2024, the company reported revenue of $290 million, which was 18% higher on a year-over-year basis. For the year, the company has guided for revenue of $1.27 billion. I believe that there are two important points to note with these numbers.
First, UiPath invested $75.3 billion in research and development for the quarter. The company released its latest platform (2023.4), which leverages the power of AI to discover automation opportunities. Investment in R&D will continue to provide UiPath an edge over its competitors over time.
Second, the company reported positive operating cash flow of $67.3 billion for the quarter. With robust revenue growth, it’s likely that operating cash flows will swell over time. This will provide ample headroom for larger investments in innovation, spurring a nice flywheel for the company and investors.
Intuitive Surgical (ISRG)
Intuitive Surgical (NASDAQ:ISRG) is a technology leader in robotic-assisted, minimally invasive surgery. Notably, ISRG stock has surged 72% over the last 12 months. I believe that intermediate corrections would be a good opportunity to accumulate the stock, as this is a long-term holding in the robotics space worth picking up on the cheap.
Why?
Well, mostly due to the company’s da Vinci surgical system. This system is Intuitive’s most popular product, with 12 million procedures performed on the system to date. For Q1 2023, Intuitive reported revenue of $1.7 billion. An important point to note is that 81% of the revenue was recurring. As the company’s product installed base swells globally, recurring revenue will increase. This provides clear cash flow visibility for investors, something that’s hard to come by in this sector.
It’s also worth noting that the company’s da Vinci system installed base stands at 4,668 in the United States. Outside the country, the installed base is 3,111. This fact implies that Intuitive has a strong global presence, something of a diversifier for investors concerned about U.S.-only exposure.
With a massive potential addressable market, the recurring revenue potential for the company is huge.
Rockwell Automation (ROK)
Rockwell Automation (NYSE:ROK) is a company that’s already in a full-on bull market rally, surging more than 20% year-to-date, at the time of writing. I’ve remained bullish on this stock as a long-term play, and that hasn’t changed.
As an overview, the company’s products and solutions cater to the manufacturing and mining industry. Their focus is on digital transformation, industry analytics, and industrial automation control. Specific to robotics, the company is partnering with robot makers to deliver control software with the latest robot technology.
Rockwell has been delivering healthy growth, and I like the fact that the company has strong global presence. For Q2 2023, the company reported 31.8% year-on-year growth from Asia Pacific. However, the region contributes to only 15% of total sales. With robust growth expected in emerging markets, Rockwell’s revenue outside North America will continue to swell.
It’s worth noting that for the first six months of 2023, Rockwell reported free cash flow of $197.7 million. With healthy growth, I expect free cash flows to swell, which will translate into higher dividends for investors over time.
On the date of publication, Faisal Humayun did not hold (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.
