SPECIAL REPORT The Top 7 Stocks for 2024

3 Robotics Stocks to Dump Before the Damage Is Done

Advertisement

  • Investors should avoid these three robotics stocks as the macro environment remains uncertain.
  • iRobot (IRBT): iRobot’s consumer-focused end-market has struggled as inflation continues to bite.
  • Sarcos Robotics (STRC): A recent downgrade due to a lack of revenue visibility is a bad sign.
  • Cognex (CGNX): The company’s end markets have not meaningfully increased automation investment.
robotics stocks - 3 Robotics Stocks to Dump Before the Damage Is Done

Source: Phonlamai Photo / Shutterstock.com

Robotics is one of the most exciting and innovative fields of technology today. From manufacturing and e-commerce to education and healthcare, robots are transforming various industries and creating new opportunities for growth and efficiency. Unfortunately, even in this dynamic space, there are many robotics companies suffering from faulty business models, a gloomy economic outlook, or a combination of the two. This has led to the emergence of robotics stocks to sell.

These risks could make them vulnerable to a market correction driven by the current expectation that interest rates will be higher for longer.

Without further ado, below are three robotics stocks that investors should dump before they suffer significant losses.

iRobot (IRBT)

a robotic hand reaching out to a human hand against a black background, with the pointer fingers touching. robotics stocks
Source: shutterstock.com/sdecoret

The maker of the popular Roomba vacuum cleaners and other home robots has been struggling with a deteriorating economic outlook that has begun to curtail consumer spending. iRobot (NASDAQ:IRBT) maintained relatively robust revenue over the past ten years, but the trend has turned on its head in recent years.

In 2022, following steep inflationary costs and rising interest rates, iRobot reported a 24.4% decline in year-over-year sales. iRobot continued to disappoint in the current calendar year with its first and second-quarter sales dropping 45.1% and 7.4% year-over-year, respectively.

While prices for consumer products across the board remain elevated, consumers have steadily cut back on discretionary spending, and this includes on robotic vacuums. In times of economic distress, the novelty of these products has perhaps begun to wear off. In order to compensate for this change and for the fact that rates are predicted to stay higher for longer, iRobot will need to bring out a new array of products consumers will find themselves actually needing. Until then, investors should just avoid this stock.

Sarcos Robotics (STRC)

robotic arms over medical bed symbolizing medical robotics
Source: shutterstock.com/MAD.vertise

Sarcos Robotics (NASDAQ:STRC) develops wearable robotic exoskeletons and mobile robots, and the robotics company has been attracting attention with its products that enhance human capabilities and productivity in various sectors, such as defense, public safety, construction, and logistics.

Sarcos’s industrial end markets are ripe for disruption and innovation, especially in the construction and logistics sectors where robotics could improve both efficiency and safety. Despite these possible growth tailwinds, Sarcos Robotics has struggled with product-to-market fit. The investment bank Jefferies (NYSE:JEF) even downgraded the robotics company due to “extremely limited visibility” in future sales.

The lack of revenue visibility is underscored if you take a glance at historical sales figures which have tended to ebb and flow, rather than generally trend upward. Sarcos’s shares have plummeted 74.6% year-to-date, and given the robotics company’s earnings inconsistency, investors should not hope for a speedy recovery. This makes it one of those robotics stocks to sell.

Cognex (CGNX)

Cognex (NASDAQ:CGNX) is another robotics company specializing in industrial applications. In particular, Cognex develops machine vision systems and software, and the company has been benefiting from the increased demand for automation and quality control in various sectors, such as automotive, electronics, logistics, and pharmaceuticals.

Throughout the 2010s, the company had been growing its revenue and earnings at a robust pace. However, the cyclicality of its end markets, which are highly sensitive to macroeconomic conditions and demand fluctuations, have hampered Cognex’s top-line growth in both 2022 and 2023. In 2022, revenue declined 3.0% YoY due to slower trends in factory automation. Unfortunately for Cognex, things have yet to reverse; rather, demand from e-commerce logistics centers, a significant end-market, has continued to soften, causing further declines in revenue growth.

Cognex’s shares have fallen 9.9% since the start of the year, and unless the macroeconomic environment improves, investors should consider dumping their shares before the situation gets worse.

On the date of publication, Tyrik Torres 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.


Article printed from InvestorPlace Media, https://investorplace.com/2023/10/3-robotics-stocks-to-dump-before-the-damage-is-done/.

©2024 InvestorPlace Media, LLC