Several robotics and artificial intelligence companies have surfaced in the past few years, producing commodities with greater efficiency than humans. Robotics stocks, represented by the Robo Global Robotics and Automation Index ETF (NYSEARCA:ROBO), has performed exceedingly well this year.
Despite the challenges presented by the pandemic, the index grew 32% compared to the S&P 500’s growth of 14%.
The companies operating in the industry vary dramatically in size and include pure and secondary plays. Additionally, they focus on different areas and have a function. Robotics stocks has immense potential, with research suggesting that it will reach $62 billion in revenue by 2024.
However, it is imperative to select the best robotics stocks with the highest upside potential. Here are three to buy now:
Robotics Stocks to Buy: Intuitive Surgical (ISRG)
Intuitive Surgical produces robotic surgical equipment and is currently the only player in its niche. It is likely to remain a dominant player in the field for a long time.
With an estimated addressable market of over $18 billion by the end of the decade, expect double-digit revenue growth. ISRG stock has performed exceedingly well this year, with a 14.7% gain relative to the S&P 500.
The company recently reported its impressive third-quarter results. Revenue grew to $1.08 billion, up 27% on a sequential basis. Moreover, net income was at $314 million, up to $68 million on a sequential basis. The second quarter improvements were mainly down to a higher number of surgeries during the third quarter. The improved patient experience and recovery, along with reduced complications, puts Intuitive Surgical in a unique position to push through to greater heights.
iRobot Corporation (IRBT)
iRobot is a consumer robot company that develops navigation, AI, mapping, and other areas. Despite the industry’s growing competition, it has roughly 52% market share, with its nearest competitor with just 14%.
IRBT stock has delivered incredibly in the past year, with it growing by more than 60%.
The company reported its blowout third-quarter results that comfortably beat estimates. Revenues grew 43% year-over-year, with 75% growth in the U.S. market. Online sales, in particular, rose by 70%, with its flagship Roomba sales accounting for 90% of its revenue mix. Moreover, gross margin rates improved to 48%, as non-GAAP earnings grew to $2.58, beating analyst estimates by $1.58.
Collectively, its EPS and revenue grew by $98.5 million. The company’s 2021 outlook looks cautious but still impressive, considering the volatility of the business environment. Sales growth of 12%-15% is expected with 40% gross margins.
2U Inc. (TWOU)
2U Inc. is one of the leaders in the emerging education technology sector. It delivers a wide variety of online courses to its users.
The company has benefited from the tailwinds created in the education sector by the Covid 19-induced restrictions. 2U stock is up 32.4% relative to the S&P 500 this year.
In its third quarter, the company delivered an incredible 31% growth year-over-year on the back of improved demand for all its services. Its two primary segments in its graduate and alternative credentials program have improved considerably despite the uncertain business conditions.
It also turned adjusted EBITDA positive during the period, with margins of 1.8%. Additionally, its cash position is also strong, growing to $500 million this quarter, up from $213 million in the second quarter.
With the shift in the education sector and the increase in distance learning, expect 2U stock to soar for the foreseeable future.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
