In this article we present a list of 10 stocks of robots that will own the future. Click to skip to the top stocks in this category and see a file 5 robot credits that will own the future.
As labor shortages and increasing labor costs continue to challenge bottom line profits for companies, they are increasingly looking for ways to cut costs, not to mention take out costly work. Global spending on automation was expected to double between 2020 and 2025, and this is likely just the tip of the iceberg. Various reports state that the industry is tied for growth at close to 10% CAGR through 2029, to be worth over $400 billion by then.
Automation not only reduces costs, but also improves productivity and quality control. McKinsey predicts that automation could boost global productivity by 0.8 to 1.4 percentage points per year, and that automation could effectively replace nearly half of the world’s salaried jobs, which pay $16 trillion in wages annually.
The automation sector serves a wide range of industries, a number that is expected to grow as technologies improve, sensors and processes improve to be able to automate previously difficult tasks.
The automotive industry accounts for about 29% of the demand for discrete automation, with a similar market share in heavy manufacturing and electronics. On the process automation side of the coin, the metals and mining industries have a huge demand for automation solutions, while the healthcare, pulp and paper, oil and gas and chemical sectors are increasingly dependent on automation as well.
Despite its long-term growth potential, robotics stocks did not do well in 2022, underperforming the broader market which was poorly performing. Having gained more than 40% from the end of 2019 through the end of 2021, the Global X Robo Global Robotics & Automation ETF has lost 35% of its value this year, slipping near 2018 levels.
Given the economic downturn and significant upfront costs involved in launching automated solutions, investors fear cash-strapped companies will refrain from making investments in automation. This creates an ideal opportunity for forward-looking investors to purchase in a promising industry at very low prices.
In this article, we will analyze ten robot stocks that can make compelling investments due to their position among some of the world’s leading hedge funds.
The following robot stocks are ranked based on hedge fund sentiment. We follow a select group of hedge funds because Insider Monkey’s research has revealed that agreed stock picks can generate impressive returns.
All hedge fund data is based on an exclusive pool of more than 900 funds tracked by Insider Monkey that submitted 13 hedge funds for the Q2 2022 reporting period.
10 robot credits that will own the future
10. ABB Ltd (NYSE:ABB)
Number of hedge fund shareholders: 17
Ambarella, Inc. (NASDAQ: AMBA) and Teradyne, Inc. (NASDAQ: TER) and Emerson Electric Co. (NYSE:EMR) are a few stocks that smart money is betting on to lead the robotics revolution. Smart money also likes ABB Ltd (NYSE: ABB), which provides automation and electricity-based tools, which is an area for long-term growth.
ABB’s second-quarter revenue fell 2% to $7.25 billion, but that was because the company was hurt by 8 percentage points from a stronger US dollar, as it does business worldwide. Orders increased 20% when discounting F/X effects, to $8.81 billion, including 33% growth in the Americas. ABB pays a dividend quarterly, with its stock yield currently at 2.18%.
NYSE:ABB hedge fund ownership has more than doubled since the end of 2020 and has remained steady over the past two quarters even as the stock started to rally against resistance. DE Shaw began placing 1.88 million shares during the second quarter, while Ken Fisher’s Fisher Asset Management owns just over 20 million shares of the company.
Artisan Partners has called off the recent decline in the share price of ABB Ltd (NYSE:ABB) as it was caused by the broader negative sentiment surrounding industrial companies, as shown in fund data. Investor Letter Q2 2022:
“ABB Ltd (NYSE: ABB) is a Switzerland-based industrial group that manufactures electronic products and equipment. There is no significant new fundamental news about the company. We believe the drop in the share price is related to negative sentiment associated with industrial companies.”
9. Omnicell, Inc. (NASDAQ:OMCL)
Number of Hedge Fund Shareholders: 18
Omnicell, Inc. provides. (NASDAQ: OMCL) Software analytics and automation capabilities for the healthcare space. The company’s inventory management and automation systems can be used by health facilities to store, fill, order, and issue medicines, while pharmacies and nurses can use their drug dispensing systems to automate workflow processes and reduce human error and waste.
Omnicell expects revenue to be $1.4 billion this year in the middle of its guidance range, which would represent a 17% year-over-year increase. Given the company’s $1.25 billion backlog at the end of 2021, this guidance may be a bit conservative. Due to its strong customer retention rate (99%), Omnicell is poised to eventually transition from a product cycle company to one that thrives on higher-margin recurring service revenue.
The hedge fund ownership of Omnicell, Inc. (NASDAQ:OMCL) reached an all-time high at the end of the first quarter before tumbling 31% in the second quarter. Anita Falicia and James Hillary’s Resolute Capital Asset Partners built a new stake in OMCL during the first quarter, but then emptied it during the second quarter.
The Carillon Scout Small Cap box loves Omnicell, Inc. (NASDAQ: OMCL) of healthcare-based automation tools, shown in the box Investor letter Q1 2022:
Omnicell (NASDAQ: OMCL) provides a comprehensive suite of clinical infrastructure and workflow automation solutions for healthcare facilities. Cloud services have been the focus of the company and have shown good growth and automation of many manual processes.”
8. Textron Inc. (NYSE:short message)
Number of hedge fund shareholders: 24
Textron Inc (NYSE: TXT) develops a wide range of products across various industries, building everything from golf carts, snowmobiles and baggage tractors, to aviation technologies and services, and advanced robotic ground vehicles. Among the last list is the Thermite fire fighting robot and the M5 RIPSAW combat vehicle.
Textron Inc. NYSE:TXT revenue was flat year over year in the second quarter, with the company generating $3.2 billion in sales. Earnings per share increased 23% year over year to $1.00. The company’s best performers were the aviation, industrial and finance sectors during the quarter, with revenue growing between 9.7% and 16.7%. Supply chain issues are expected to affect the company’s ability to make deliveries this year, pushing some sales projected into 2023.
There was an unprecedented rise in hedge fund ownership of Textron Inc (NYSE:TXT) at the end of 2021, but the number of longtime money managers the stock fell 29% in 2022. Gregg Moskowitz’s Interval Partners and Anand Parekh’s Alyeska Investment Management were two. of the funds that sold their stakes in TXT during the second quarter.
7. UiPath Inc. (NYSE:road)
Number of Hedge Fund Shareholders: 25
UiPath Inc. provides (NYSE: PATH) Comprehensive automation platforms that allow customers to build complex automation processes through the UiPath Studio platform, and use machine learning models to further enhance workflow productivity. The company also develops software robots that can work in conjunction with automated processes designed specifically to monitor tasks.
Shares of UiPath Inc (NYSE:PATH) are down 69% this year despite the company reporting strong second-quarter results. It generated $242 million in sales during the quarter, nearly 10% around the company’s guidance, while its adjusted operating loss of $11.2 million was much better than the $55 million to $60 million loss the company had been expecting. The company’s annual renewal run rate also crossed $1 billion during the quarter for the first time.
Hedge funds showed strong interest in UiPath Inc. (NYSE: PATH) after its initial public offering in the second quarter of 2021, but stock ownership waned over the following quarter and has declined ever since. Cathie Wood’s ARK Investment Management has been the company’s biggest bull since its initial public offering, owning 37.6 million shares in PATH on June 30.
6. Rockwell Automation, Inc. (NYSE:The Republic of Korea)
Number of Hedge Fund Shareholders: 28
Rockwell Automation, Inc. (NYSE: ROK) Automation-based systems, software and components across a range of industries, including energy, automotive and food production. Supply chain issues affected Rockwell’s ability to meet orders during the last fiscal quarter, leaving the company with a record backlog. However, despite missed orders, the company continued to increase its sales by double digits during the third quarter of the fiscal year. Rockwell is also paying a dividend, with the stock currently at 1.93%.
Rockwell Automation, Inc. (NYSE: ROK) is another robotics stock that has fallen out of favor with top money managers in recent quarters, with 45% less funding in the ROK on June 30 than there was two years earlier. Billionaire investment icon Israel Englander and Louis Bacon were among the money managers who ran out of stakes in the company during the second quarter.
Harding-Loughner Global Equity Fund is an optimist at Rockwell Automation, Inc. (NYSE: ROK) Given the pace of resettlement initiatives in the United States, which has companies exploring ways to re-saving offshore costs through automation. The fund discussed its thoughts on the opportunity for Rockwell to grow in its field Investor letter Q1 2022:
“Rockwell Automation (NYSE: ROK) is one such company that we bought into during a market correction this quarter. The company—still headquartered in Milwaukee, where it developed its first product, an electric motor speed controller, 120 years ago—focuses on particularly on North America.Rockwell’s sales growth stalled during a capital expenditure slump in the U.S. after recovering from the global financial crisis.The company sold sensors, actuators, valves and control software, but lacked the ability to weave all of these offerings together to provide a single point of control for customers wanting to Automate an existing plant or build a new fully automated plant.Its 2018 minority investment in PTC Inc (NASDAQ:PTC), a Boston-based industrial software company with a strong capability in augmented reality and visualization tools, marks a turning point in Rockwell’s fortunes.With this partnership, Rockwell has been able to develop software that integrates data from individual business segments, linking them together on its “FactoryTalk” platform, to give managers a real-time digital picture of their operations. It will benefit from re-supply initiatives as a wave of manufacturers scarred by pandemic disruptions in the supply chain are looking to automation to help them re-achieve some of the cost savings that drove them abroad in the first place. After a bit of growth for seven years, the company saw a 40% increase in orders in the first quarter compared to the same period last year and forecast organic sales growth of between 14% and 17%.”
Ambarella, Inc. (NASDAQ: AMBA) and Teradyne, Inc. (NASDAQ: TER) and Emerson Electric Co. (NYSE: EMR) is one of the top robot stocks that smart money buys. See why by clicking on the link below.
Click to continue reading and see a file 5 robot credits that will own the future.
Disclosure: none. The 10 bot credits that will own the future were originally published on Insider Monkey.
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