Artificial intelligence (AI) has empowered robots to carry out many tasks that were previously impossible for them. Among these capabilities are helping human customers in stores, picking produce and serving beverages. AI-powered robots also perform a variety of tasks in factories. As AI becomes more advanced going forward, robots’ capabilities will only increase. Moreover, with American businesses currently struggling to find workers to fill jobs, more and more of them will turn to robots as substitutes. All of these developments are extremely positive for robotics stocks. And given these strong catalysts, many robotics companies are well-positioned to succeed in the medium-term and the long-term. To enable investors to capitalize on this trend, here are three of the best robotics stocks.
ABB (ABBNY)
Europe-based ABB (OTCMKTS:ABBNY) sells robotic arms and controllers which many companies incorporate into manufacturing processes.
In April, the company indicated that it would benefit from the energy revolution in the U.S. Specifically, ABB reported that it would invest $170 million in America in order to meet increased customer demand for its electrification and automation offerings. Since the EU and China are also participating in the energy revolution, ABB is also likely benefiting from similar, increased demand in those countries.
On July 20, ABB noted that its net profit had surged in the second quarter to $906 million, versus $379 million during the same period a year earlier. The company’s operational EBITDA also reached a record level of $1.42 billion.
Moreover, ABB is well-positioned to benefit from consumers’ increased purchases of goods in the medium-term and from strong auto sales in the U.S. and China.
The forward price-earnings ratio of ABB stock is an attractive 20.2.
Teradyne (TER)
Teradyne (NASDAQ:TER) markets robots that test manufactured products. TER also sells robotic arms used in manufacturing and self-driving bots used in warehouses.
According to one study, “the automation testing market is valued at $20 billion in 2022 and is expected to show a compound annual growth rate of more than 15% til 2032.” Consequently, TER appears to have a bright, long-term future.
Additionally, Teradyne supplies automation tools to top chipmakers, leaving it well-positioned to benefit from the proliferation of AI in more ways than one. And TER obtains about 30% of its revenue from chipmakers that focus on the automotive and industrial markets, leaving it well-positioned to get a boost from the strength of those semiconductor firms.
In the first quarter of 2023, TER’s earnings per share dropped to 55 cents from 98 cents during the same period a year earlier. But as the chip sector expands amid increased demand for consumer electronics and manufacturers increasingly automate their testing processes, I believe that TER’s results will rebound and become one of the best robotics stocks.
Fanuc (FANUY)
Japan-based Fanuc (OTCMKTS:FANUY) markets many different types of robots, including those used in factories. The company is creating new robots that will enable factories to become more automated.
Among the sectors to which it sells its robots are aerospace, automotive, construction, energy and food. Its robots are used to carry out welding, assembly line work, transportation, injection molding and cutting.
The company also sells numerical controls and lasers, as well as various types of motors and machines.
In Fanuc’s 2022 annual report, the company stated that “the demand for robots is rising rapidly all over the world,” adding that it was considering building an additional factory to meet the demand. Also noteworthy is that “operating margin of ROBOT (business) is gradually improving.”
On July 22, Morgan Stanley (NYSE:MS) identified Fanuc as a company that will benefit from efforts to cope with inflation over the long-term.
In the first quarter of 2023, Fanuc’s top line climbed to $1.6 billion from $1.58 billion during the same period a year earlier. With the company poised to benefit from strong demand for its robots, its top and bottom line performance should be strong over the medium-term and the long-term.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article.
