What comes to mind when you think of robots?
The answer probably depends on when you came of age. For some, it may be those awkward-looking tank-like machines that were supposed to look sort of human. Others may think of R2-D2 and C-3PO from Star Wars. Or your kids or grandkids may think of The Iron Giant or BayMax from the recent movie Big Hero 6.
There are many others, of course, as robots have long fascinated us. Our association tends to be with those fictional friends from books and movies, but the truth is that robots are less about people-like creatures and more about programmed machines that get things done better, safer and more efficiently than we as humans can.
As advancements continue, especially with the ongoing work in artificial intelligence (AI), robots will do more, and companies and people will spend more on them. Nearly every industry is increasing its exposure to robotics and automation. That makes it an exciting NexGen trend with the potential to impact our lives and make us a lot of money.
They’re Already Here…
We may not all have Rosie the Robot (from The Jetsons) zooming around our homes taking care of things – yet – but there are a lot of robots in our world today. You may even already have some in your home.
iRobot (IRBT) has some pretty cool products like the Roomba vacuum cleaner that can clean your floors on a schedule and learn its way around furniture, walls and doorways. The Scooba washes the floor and vacuums at the same time, and the Looj cleans gutters. Friendly Robotics has a robot lawn mower, and for those of you with cats, the Litter-Robot automates the fun job of cleaning out the litter box.
Those are just a few uses around the house, and you’ll see many more of them in the coming years. Global household robot sales are expected to climb to $33 billion in the next eight years. Expect to see more robotic pets (that’s more my speed) and personal assistants (I can go for that, too), as well as an increasing number of robots helping kids learn.
There is also big money in the more industrial applications. The military uses robotic vehicles, unmanned aircraft and more. Emergency responders use them for bomb disposal so they don’t have to put human beings in harm’s way. In healthcare, robots enable even more precise surgery, which can be performed by a robotic arm – even with the surgeon in a completely different city.
More and more of the manufacturing process is now done by machines as well. You’ve probably seen the pictures of automobiles being manufactured at factories by robots, and that’s just the tip of the iceberg. On paper, robotics and automation make a lot of business sense. Labor costs will be lowered dramatically, by as much as 90% in some situations. Productivity will increase as there is no human error, less waste and improved quality. Merrill Lynch estimates that by 2025, less than 10 years from now, 45% of all manufacturing tasks will be performed by robots.
…And We’re Already Making Money
One of the great things about our NexGen mega-trends is that there are multiple ways to make money on them. With robotics, for example, you could invest in companies that make robots and automation devices, the chip makers that are the brains of the robots, the companies implementing the devices, the software makers that are driving the devices and more.
On the broadest level, there are a couple of interesting exchange-traded funds (ETFs) to consider. Global X Robotics & Artificial Intelligence ETF (BOTZ) is up 60% so far in 2017, and Robo Global Robotics & Automation (ROBO) is up over 40%. I expect we will own one or both of those at various times through the years in my NexGen Profit Multiplier service, where ETFs are part of our layered strategy.
When it comes to individual companies, a lot of the action is in Japan as well as China. Two Japanese companies worth watching that are traded in the United States are Fanuc (FANUY) and Omron (OMRNY).
The U.S. is actually behind in its investment in robots, but one U.S.-based company is already making my subscribers good money in my NexGen Trader service. Cognex (CGNX) is all about automation, robotics and improving the manufacturing process. We’re up more than 25% in just two months, and we are getting closer to taking profits after such a big run. I’m sure we’ll be back in it when we get the right set-up again.
The robotics revolution is real, and it’s here to stay. It’s also not something to be afraid of. Don’t focus on the Hollywood portrayal of robots. Instead, focus on the real improvements being made for both businesses and consumers, and then can you get a sense for the great opportunities coming our way as investors. Wall Street is already slow getting there, so we can be there waiting when they do.