Among the long-term investment themes, robotics stocks are worth considering for multibagger returns. In the dynamic world when it comes to technology, robotics and artificial intelligence will play a key role across industries. Companies need to adopt these technologies to stay competitive and cut costs.
I therefore believe that some of the best robotics stocks should be in the long-term portfolio. To put things into perspective in terms of growth, it’s expected that the industrial robotics market will be worth $60.56 billion by 2030. An optimistic estimate indicates that the market for industrial robotics can be potentially worth $142.8 billion by 2032.
All these estimates point to sustained growth for the industry. This column discusses three robotics stocks that are positioned to benefit from positive industry tailwinds. In the long term, these stocks are likely to deliver multi-bagger returns.
Let’s discuss the reasons to be bullish on these attractively valued stocks.
Intuitive Surgical (ISRG)
Intuitive Surgical (NASDAQ:ISRG) is among the top robotics stocks to buy. After trading at July highs of $358, ISRG stock has corrected by 20%. I believe that this correction is a good opportunity to accumulate.
As an overview, Intuitive Surgical has a global presence in the robotic-assisted, minimally invasive surgery business. For Q2 2023, Intuitive reported healthy revenue growth of 15% on a year-on-year basis to $1.76 billion. With the growing adoption of robotics-assisted surgical procedures, revenue growth is likely to remain robust.
It’s also worth noting that 79% of the company’s revenue is recurring. As the installed base of Da Vinci System swells globally, the company’s cash flow visibility will increase. This provides ample headroom for dividend growth and investment in innovation.
Another key growth trigger is as follows. As of Q2 2023, the Da Vinci System installed base in the U.S. was 4,805. Internationally, the number was at 3,237. Clearly, the company’s presence is well diversified and there is big growth potential in Europe and emerging Asia.
UiPath (PATH)
UiPath (NYSE:PATH) stock has been volatile with a downward bias in the last year. I however believe that business developments are positive for this robotic process automation solutions provider. The correction is a good opportunity to accumulate PATH stock for the long term.
For Q1 2024, UiPath reported revenue of $289.6 million. For the same period, the company’s GAAP operating loss narrowed significantly. With annual recurring revenue continuing to increase on a quarter-on-quarter basis, I am bullish on sustained improvement in key margins. The positive trend in the number of large customers also points to continued margin improvement. I believe that as operating cash flows turn positive on a sustained basis, PATH stock will trend higher. s
An important point to note is that the company’s AI-powered UiPath Business Automation Platform has applications across all major industries. The addressable market is therefore significant and the company’s heavy investment in R&D will ensure a competitive edge.
Teradyne (TER)
Teradyne (NYSE:TER) stock has marginally trended higher in the last few quarters. A breakout on the upside seems imminent after the current period of consolidation. At a forward price-earnings ratio of 35.8, the growth stock looks attractive.
As an overview, Teradyne is a provider of advanced test solutions and collaborative and autonomous mobile robots. For Q2 2023, the company reported revenue and operating profit of $684 million and $151 million respectively.
An important point to note is that the company’s robotics business was negatively impacted due to slowing global industrial activity. However, this is likely to reverse in the coming quarters and will boost growth. The company has already initiated shipment of UR20, which has a “substantial backlog.”
Currently, robotics contributes to 13% of total sales with 87% coming from automated tests. The company expects revenue contribution from the robotics business to increase to 19% by 2026. With sustained free cash flows, there is a strong case for potential acquisitions to boost growth.
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.
