Robotics is the core of automation in a variety of business sectors. In this day and age, with the demand for and proliferation of artificial intelligence- and machine learning-based technologies, the robotics sector could experience a real boom. Nowadays, investing in robotics stocks could make a great investment, especially considering how well the Nasdaq Composite has performed. The tech-heavy index has rallied 18.9% on a year-to-date basis, and everything related to automation and AI could keep the index rising even higher. Better-than-expected inflation data has also sparked markets into a rally. If the economic data improves, investors will be betting on one or more rate cuts by the end of the year, which could also improve equities prospects.
However, it is important to distinguish between potentially high-performing robotics stocks and those that investors ought to avoid. In this article, we will discuss three robotics stocks likely to crash and burn as we approach July.
Here are the robotics stocks to sell:
Robotics Stocks to Sell: iRobot (IRBT)
Founded in 1990 by MIT roboticists, iRobot (NASDAQ:IRBT) is a designer and manufacturer of consumer-focused robots. The firm is particularly renowned for its Roomba series of robotic vacuum cleaners, which have helped automate certain home cleaning aspects with advanced technology and user-friendly features. iRobot’s product portfolio does not stop there. The company also provides the Braava line of mopping robots.
Unfortunately for iRobot, high inflation, elevated interest rates, and waning consumer confidence have severely dented the consumer robotics firm’s sales growth. IRobot’s sales have been in decline since 2022. Because of iRobot’s declining prospects, the company has pursued a restructuring plan, but even after implementing a quarter of cost-cutting initiatives, the robotics firm delivered mixed results in the first quarter of 2024.
iRobot’s shares have collapsed more than 77% in 2024, and a further plunge is possible, especially as the business continues to deliver underwhelming financial results amidst its restructuring period.
Medtronic (MDT)
Medtronic (NASDAQ:MDT) manufactures and sells a variety of medical devices to healthcare facilities and clinics. The medical device manufacturer’s robotics portfolio is centered around the Hugo Robotic-Assisted Surgery (RAS) system, which offers a modular design, advanced 3D visualization, and data integration for enhanced surgical precision. Complementing Hugo is the Touch Surgery Enterprise, a cloud-based video capture and analytics platform that effectively aids in the surgical review process. Medtronic’s ongoing R&D efforts aim to refine these technologies with AI and machine learning integrations to improve surgical outcomes further.
Unfortunately, R&D investments have recently led to compressing margins and falling earnings. In particular, Medtronic’s fourth-quarter earnings results for fiscal year 2024 showed non-GAAP earnings per share at $1.46, below $1.57 for the same period a year prior.
Equities traders and investors will likely scrutinize the earnings of companies trying to enter the AI space, and declining margins are never a good sign. MDT shares have fallen more than 4% for the year.
Rockwell Automation (ROK)
Rockwell Automation (NYSE:ROK) provides numerous industrial automation solutions to clients. The last time I wrote about Rockwell in mid-May, its shares had declined 11.1% for the year. In July, the industrial automation firm’s share price has now slipped 13.9% on a year-to-date basis. In particular, I noted how Rockwell’s sales for automotive solutions declined in the “high single digits” for their first-quarter earnings of fiscal year 2024. This decline was related to ongoing headwinds facing the electric vehicle (EV) market. Those headwinds have not abated for certain EV makers. For example, Tesla’s (NASDAQ:TSLA) factory output in Shanghai remains dismal, potentially pointing to more pressure for Rockwell’s automotive business going forward.
Growing pessimism about the U.S. industrial base has led to several stock price downgrades from brokers. Underscoring those sentiments, Deutsche Bank, Barclays, Goldman Sachs, Citigroup, and banks have all adjusted their price targets for ROK downward in recent weeks. Thus, I think it is one of the robotics stocks to sell.
On the date of publication, Tyrik Torres 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
