Robotics is an interesting mix of science, engineering, innovation, progress, and future economic and business disruption. Investing in robotics stocks can be fascinating exploring the new technological leaps, and while most of these stocks are not considered value stocks they can provide plenty of growth and potential capital gains.
Often, investing in robotics is connected to investing in artificial intelligence. Robots can learn, adapt to new data and become more productive and efficient.
There are multiple uses of robotics in business and life, the most notable ones being in manufacturing, logistics, plus science and healthcare. And programming, combined with the use of artificial intelligence, is among the major fields of robotics.
A recent report by Research and Markets says, “The robotics market was valued at USD 39.72 billion in 2019 and is expected to register a CAGR of 25.38% over the forecast period from 2020 to 2025. The market is experiencing a significant transformation, with robots growing beyond the workhorses of industrial shop floors and beginning to adopt the roles of personal assistants, surgical assistants, delivery vehicles, autonomous vehicles, exoskeletons, and crewless aerial vehicles, among many other uses.”
Let’s look at these robotics stocks to consider for your portfolio:
- ABB Ltd. (NYSE:ABB)
- Intuitive Surgical, Inc. (NASDAQ:ISRG)
- iRobot Corporation (NASDAQ:IRBT)
- Rockwell Automation Inc. (NYSE:ROK)
Robotics Stocks: ABB Ltd. (ABB)
ABB has a history of more than 100 years as it was founded in 1883 and is based in Switzerland. It is a group with many products related to major robotics, electrification products and solutions to industrial automation companies. Some of the company’s customers are in the business sectors of utilities, industry and transport, and infrastructure.
The company has robotics and discrete automation segments providing industrial robots, software, spare parts and other products. ABB also collaborates with IBM (NYSE:IBM). While simply looking at the price-earnings ratio of a stock should not be the primary reason for investing in it, ABB stock has a P/E of 12.95 (TTM). This seems cheap compared to the broader stock market such as the S&P 500 index.
The forward dividend and yield of $0.87 and 2.77% respectively now are attractive, too. According to Zacks, the stock has an expected earnings per share growth for the next three-to-five years of 6.20%. Overall it can be both a value stock and a growth stock given its large market capitalization of about $64 billion.
Intuitive Surgical (ISRG)
What does Intuitive Surgical have in common with the famous Leonardo da Vinci? The company, which was founded in 1995 with headquarters in California, is the maker, designer and developer of the branded da Vinci surgical systems internationally. Could it be that in the future robots deploy surgical skills and replace humans? For now, this is just pure fiction, but da Vinci is helpful in various surgical procedures, such as gynecologic or cardiothoracic procedures.
The ISRG stock has a one-year performance of about 66%. In 2021, it is down about 13%. The stock does not seem cheap having a P/E of 81.04. But with an expected EPS growth of 8.47% for the next three-to-five years, it is among solid stocks both in the healthcare sector and robotics, too.
With a market capitalization of near $85 company, it is a large and mature company with attractive growth and a dominant role in surgery.
iRobot Corporation (IRBT)
Looking at the 52-week range for IRBT stock ($37.01 per share to $197.40), and its current price of about $111, an observer may think that an impressive occurred, and that a nice stock price correction also took place.
Both assumptions are correct. But the story behind IRBT is much deeper.
This is a consumer robot company that has a dominant position in the market for robotic vacuum cleaners, a strong economic moat. It was founded in 1990 and is based in Massachusetts. The company builds and sells robots in the United States, Europe, the Middle East and other regions. And if the first impression when hearing about floor vacuuming robots is boring, the market has a much different opinion.
The stock is up nearly 55% in 2021. Yet its P/E of 24.09 is not irrational. The expected EPS growth of 12.50% for the next three-to-five years shows that plenty of growth could be possible.
Robotics Stocks: Rockwell Automation (ROK)
Rockwell Automation focuses on industrial automation and digital transformation. It was formed in 1903 and is based in Wisconsin. The company’s products include manufacturing hardware, software, and lifecycle services in late 2020.
To describe it simply, the company’s initiatives form an industrial Internet of Things business.
With a market capitalization of near $31 billion, it is also a mature company. With a P/E of 23.42, the stock seems not too pricey, and it has a forward dividend and yield of $4.28 and 1.63% respectively.
Add the expected EPS growth of 9.30% for the next three-to-five years and you have a prime candidate to monitor for the future of robotics in the industrial sector.
On the date of publication, Stavros Georgiadis, CFA, did not have (either directly or indirectly) any positions in the securities mentioned in this article.
