I am fascinated by robots. From an investment standpoint, robotics looks to be the natural complement to AI’s advancement. Capable machinery powered by the latest artificial intelligence platform can help businesses perform complex mechanical tasks in manufacturing, healthcare, and other sectors, cutting down process times and increasing efficiency to its maximum. Autonomous mobile robots (AMRs) are already popular in some sectors, so this might be a good time for other investors to shop around for robotics stocks to buy and hold. 

Of course, you wouldn’t want to buy just any old company, which is why I’ll screen the market for the best robotics stocks to buy, gauging them on their fundamentals and capacity for longevity. Remember, robotics is not a new industry, but recent advances in AI make it an increasingly attractive investment area.

To get my list, I screened companies that operate in the robotics industry or have robotics-related business segments using the following criteria:

• Debt-to-equity ratio: 1.25 and below. The debt-to-equity ratio measures a company’s financial leverage. The lower the leverage ratio, the better it manages its obligations,
• Return-on-equity ratio: 15% and above. Return on equity measures how efficiently the company handles its capital to produce profits. Fifteen percent is considered a good level, so I scanned for companies with higher than that,
• Analyst rating: Buy or higher.

I then sorted the list based on the highest to lowest ROE. Here are the results:

Teradyne (TER)

Teradyne (NASDAQ:TER) is the go-to name for automated test equipment used in industrial applications. The company’s core business specializes in the semiconductor market. Besides its testing expertise, the company offers other services like automation and robotics.

Teradyne recently appointed James Davidson as its Chief AI Officer, aiming to support its vision to revolutionize the manufacturing industry by leveraging Davidson’s experience in both robotics and artificial intelligence. In addition, Teradyne has partnered with the AI powerhouse Nvidia (NASDAQ:NVDA) to support the development of its automation capabilities.

While Teradyne may have had a slower FY 2023 due to its revenue decline, its Robotics segment boasted 50% year-over-year growth in Q4 2023, highlighting its strong potential for a growing market segment. 

In addition, revenue in Q2 2024 was up 7% year over year, surpassing its guidance. CEO Greg Smith emphasized its robotics sector, and the growing demand for AI has been a strong catalyst in its growth. With an ROE of 18.77% and an almost non-existent debt-to-equity ratio, the company boasts a strong proposition for long-term investors looking for robotics stocks to buy and hold. Even Wall Street’s strong buy consensus agrees with this. 

ESAB Corporation (ESAB)

ESAB Corporation (NYSE:ESAB), the world leader in cutting, fabrication, and welding equipment, offers various industrial solutions to its customers, including robotics, gas control equipment, and digital solutions. The company operates in two main segments:

• EMEA & APAC: Focuses on operations in Europe, India, Africa, the Middle East, and Asia Pacific,
• Americas: Focuses on its North and South American operations.

ESAB has been experiencing moderate yet continuous revenue growth for several years. While earnings growth over the last three years has been flat, the company maintains a return on equity (ROE) of 17.49%. Its debt-to-equity ratio also stands at 0.59, demonstrating its effectiveness in managing debt.

In addition, President and CEO Shyam P. Kambeyanda has highlighted that the company’s drivers for growth and profitability come from its new innovative products and EBX initiatives. No wonder it boasts a strong buy consensus rating among nine analysts. With its strong commitment to growth and cash flow generation, it is a no-brainer to check out ESAB if you want to buy and hold robotics stocks.

Novanta (NOVT)

When it comes to robotics discussions, some might already know Novanta (NASDAQ:NOVT) due to its reputation in electronics, metrology, robotics, and automation. The company operates in three main segments:

• Precision Medicine and Manufacturing: laser technology and optical engine products,
• Medical Solutions: medical-grade technologies and visualization solutions,
• Robotics and Automation: optical and inductive encoders, servo drives, precision motors, intelligent robotic end-of-arm technology solutions, etc.

Novanta had a strong FY 2023, reaching a record revenue of $882 million, a 2.4% improvement over the previous year’s $861 million. However, its earnings per share decreased slightly from $2.06 to $2.02, due mostly to acquisitions. 

“Combined with continuing to institutionalize the Novanta Growth System deep into our Company’s culture,” said CEO and chair Matthijs Glastra, “our playbook will continue to deliver predictable, consistent, long-term growth and shareholder value.”

Novanta’s debt-to-equity ratio is currently 0.75, and its return-to-equity ratio is 16.58%, highlighting its strong financial foundation and effective management. Wall Street consensus currently rates NOVT stock as a consensus buy. With its diverse product lineup and sound financials, Novanta is a strong contender for the best robotics stocks to buy today.

On the date of publication, Rick Orford 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.

On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.