With the boom in AI stocks cooling off, investors looking for other breakout sectors have their work cut out for them. I would argue that such investors should look into specific robotics stocks poised for their own breakout.
Some may put AI and robotics in the same category, but they are very different. Most popular AI businesses currently focus on large language models, customer service, or other intangible industries. On the other hand, robotics has seen tremendous advances lately (from factory robots to surgical bots to self-driving cars). Thus, many robotics stocks now look cheap, relative to the incredible AI hype we saw materialize. Additionally, with accelerating AI development, robotics stocks only stand to benefit from improved software.
Thus, let’s look at three promising yet cheap robotics stocks that could supercharge your portfolio. The Nasdaq may be peaking, but these robotics stocks have plenty of room to run.
Kraken Robotics (KRKNF)
Kraken Robotics (OTCMKTS:KRKNF) makes underwater robots and sensors for the marine industry. Their products include sonar, sensors, underwater drones, remote-operated vehicles for seabed mapping, pipeline inspections, environmental monitoring, and more.
This Canadian company has largely flown under the radar, and now trades 41% off its highs from earlier this year. That said, the stock seems to be bottoming out and could rebound soon. Kraken has huge growth potential as the global market for underwater robots is expected to hit nearly $11 billion by 2030.
In Q1 2023, the company’s revenue jumped 37.5% to $7.6 million. Notably, after a massive loss last year, Kraken did significantly reduce its losses to only $1.34 million this past quarter, a 47.8% year-over-year reduction.
Robert Young from Canaccord is the lone analyst on the stock. He’s got a buy rating and a price target of 90 cents on this stock. That represents robust 136% upside from today’s 28 cents. However, I think that price target is fair, given Kraken’s growth prospects and strengths in underwater robotics.
UiPath (PATH)
UiPath (NYSE:PATH) is a leader in robotic process automation (RPA) software used to automate repetitive tasks for businesses. This stock has been stuck in the $10-$15 range for more than a year. However, I believe a breakout could happen soon, simply because Wall Street is still underestimating the company’s growth potential.
With over 10,000 global enterprise customers across various industries, UiPath has a massive reach. The company’s 122% net retention rate shows strong customer loyalty too, and a partner network of 5,000+ companies, including Microsoft (NASDAQ:MSFT) and Salesforce (NYSE:CRM), also provide wide sales channels.
Since its IPO in April 2021, UiPath has topped earnings expectations every single quarter. In Q1 2024, revenue grew 18.2% to $289.6 million, cruising by estimates of $272 million. Non-GAAP earnings per share of 11 cents also handily beat consensus estimates of 2 cents. On top of that, management raised its full-year guidance to 20% year-over-year revenue growth.
Analysts have an average price target of $18.20 for PATH stock, representing 18% upside. In my opinion, I think it’s likely this stock will be a compounder over time, given UiPath’s leadership in the RPA market, which is expected to grow at a compounded annual growth rate of nearly 38% through 2032.
Zebra Technologies (ZBRA)
Zebra Technologies (NASDAQ:ZBRA) is a leader in enterprise asset intelligence, providing real-time visibility into inventory, equipment, vehicles, people, and more. Notably, ZBRA stock has fallen 58% from its peak in last year due to recent earnings disappointments driven by supply chain disruptions.
While these near-term headwinds are priced in, I see this recent dip as a buying opportunity. Zebra is forecasted to deliver double-digit growth through at least 2026. In Q2 2023, revenue declined by 17.3% to $1.2 billion. But as I said earlier, this deceleration is likely temporary, and should be reversed over the next few years.
I would caution that management sharply slashed their revenue guidance to $964 million for the full year. Now, that’s not great, but the market has priced that in already. Thus, I expect a similarly sharp recovery once the company’s supply chain situation improves.
Zebra has a wide reach with over 10,000 partners globally across retail, healthcare, manufacturing, and other industries. Its competitive moat will widen as the enterprise asset intelligence market grows at a 24.2% CAGR to $20.5 billion by 2032. Impressively, Zebra also invests 10% of its revenue into innovation, landing it over 6,500 patents worldwide. Thus, with all that in mind, I see substantial capital appreciation ahead for investors in ZBRA stock.
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On the date of publication, Omor Ibne Ehsan did not have (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.
