Today, we discuss three of the best robotics stocks to buy for long-term growth. The influence of robotics is no longer confined to the realm of science fiction. From manufacturing and logistics to MedTech and even our homes, robotics is already transforming our everyday lives. In addition, it is revolutionizing numerous industries, from performing complex surgeries in healthcare to streamlining production lines in manufacturing.
However, with a vast array of robotics companies vying for market share, identifying the best stocks can be a challenge. Therefore, this article presents three of the best robotics stocks to buy in May. These companies boast innovative technologies with real-world applications. Moreover, they exhibit robust financial performance and a clear trajectory for future success. By incorporating these leaders in the robotics revolution into their portfolios, investors can strategically capitalize on this transformative trend.
Teradyne (TER)
Topping our list of best robotics stocks to buy is Teradyne (NASDAQ:TER), a leading designer of automated test equipment and robotics. Its electronic test segment speeds time-to-market for new electronics, ensuring the functionality and reliability of semiconductors, electronic systems and wireless devices. Additionally, its industrial automation segment provides robotics solutions, including collaborative robotic arms, autonomous mobile robots and advanced robotic control software.
In late April, Teradyne delivered mixed first-quarter 2024 earnings. Revenue totaled $600 million, 2% above the high end of their guidance but down 3% from the previous year due to continued weakness in mobility. Net income dropped to $82.5 million, a 9.6% decrease compared to the prior year’s quarter. Earnings per diluted share came in at 51 cents, significantly outperforming the anticipated 38 cents but down 7.2% year-over-year (YOY).
Recently, Teradyne announced a strategic collaboration with Nvidia (NASDAQ:NVDA) to integrate advanced artificial intelligence (AI) capabilities to enhance collaborative robot (cobot) functionality. Live demonstrations have showcased a dramatic improvement in path planning speed compared to existing solutions.
Despite the volatility on Wall Street, TER stock has gained a solid 15% year-to-date (YTD) and now trades at 38.9x forward earnings. As the Street placed a median 12-month price target of $122, interested readers may consider waiting for a pullback before buying TER shares.
Rockwell Automation (ROK)
Next, Rockwell Automation (NYSE:ROK) emerges as another compelling investment opportunity in the robotics sector. This leader in industrial automation offers a comprehensive suite of solutions, encompassing industrial control systems, motion control technologies, information technology integration and factory automation software. These solutions enable manufacturers to automate production lines and improve data-driven decision-making and operational performance.
Rockwell Automation recently announced mixed fiscal 2024 second-quarter results. Revenue totaled $2.13 billion, down 6.6% YOY, while organic sales dipped 8.1%. Net income dipped 11.3% to $266 million, due to lower pre-tax margin. Meanwhile, adjusted earnings per share (EPS) surpassed expectations but declined 16.9% YOY to $2.50 due to lower segment operating margin.
Looking ahead, Rockwell Automation has revised its full-year guidance downwards. Management now anticipates a 7% decline in organic sales at the midpoint and a 13% decrease in adjusted EPS. In response to these challenges, management is intensifying its cost reduction efforts, targeting $100 million in savings in the second half of fiscal 2024.
So far in 2024, ROK stock has lost more than 11%, while the stock is trading at 23.7 times forward earnings and 3.5 times sales. Despite recent price weakness, Wall Street remains optimistic, with a median 12-month price target of $300, implying a potential 10% upside. Interested investors can consider waiting for a drop toward the $255 area to initiate positions.
ROBO Global Robotics and Automation Index ETF (ROBO)
Rounding out our discussion on robotics investments is the ROBO Global Robotics and Automation Index ETF (NYSEARCA:ROBO). Since its inception in October 2013, net assets have grown close to $1.28 billion. ROBO, which provides exposure to global companies engaged in robotics, automation and artificial intelligence, has 77 holdings. The top 10 names comprise about 18% of the fund.
The leading sectors in the fund include Industrials (46.5%), Technology (39.1%) and Healthcare (12.3%). Teradyne, Zebra Technologies (NASDAQ:ZBRA), Fanuc (OTCMKTS:FANUY), Intuitive Surgical (NASDAQ:ISRG) and Kardex (OTCMKTS:KRDXF) are among the top stocks in the ETF.
Since the beginning of the year, ROBO has traded flat. Yet, the current valuation appears favorable, with a trailing price-to-earnings (P/E) ratio of 29.6x. Given the importance of automation, we’re bullish on the ROBO. Finally, interested investors should also note the annual expense ratio of 0.95%.
On the date of publication, Tezcan Gecgil had both long and short positions in NVDA stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
