These futuristic picks are primed to generate lucrative returns for future-minded investors
Robotics stocks have been gaining significant traction among buy-and-hold investors lately. This is not surprising, as we’re seeing rising demand for robotics from a variety of segments — from electric vehicles (EV) and e-commerce groups to electronics names and the oil industry. As a result, Wall Street has taken notice. That’s why today I’ll discuss seven robotics stocks that are primed to generate lucrative returns long-term.
Currently, tech giants like Tesla (NASDAQ:TSLA) and Amazon (NASDAQ:AMZN) are leading the way in this space, integrating robotics into their core businesses. Further, Tesla has specifically been in the news of late, turning to artificial intelligence (AI) and robotics for its latest AI-assisted city-driving software, Full Self-Driving (FSD) V11. The company is even building a humanoid robot as well, the Tesla Bot. Meanwhile, Amazon already operates digitalized warehouses staffed by robots and machines.
So, numerous firms are turning to robots to increase efficiency, improve safety and decrease costs. In fact, the industrial robotics market was valued at $24.35 billion in 2020 and is predicted to hit $52.85 billion by 2026. That’s a “CAGR [compound annual growth rate] of 14.11% over the forecast period (2021 – 2026).”
With that information in mind, let’s take a closer look at these seven robotics stocks to buy for September:
- ABB (NYSE:ABB)
- AeroVironment (NASDAQ:AVAV)
- Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ)
- Intuitive Surgical (NASDAQ:ISRG)
- iRobot (NASDAQ:IRBT)
- Oceaneering International (NYSE:OII)
- Raytheon Technologies (NYSE:RTX)
Robotics Stocks to Buy: ABB (ABB)
52-week range: $24.07 – $38.03
Dividend yield: 2.28%
First up on this list of robotics stocks to buy, ABB makes robots used in industrial plants and manufacturing. This European industrial giant is one of the largest robotics companies in the world as well as a leading player in process motion control, automation and electrification products.
ABB announced second-quarter results back in late July. For the quarter, revenue increased 21% year-over-year (YOY) to $7.45 billion. Net income also surged 136% to $752 million, or 37 cents per basic share. Finally, cash flow from operating activities stood at $663 million. On the results, CEO Björn Rosengren noted the following:
“The strong upturn in Operational EBITA margin reflects the recovery in demand in combination with increased internal efficiency and the strength of ABB’s electrification and automation offerings.”
ABB aims to create the “factory of the future” through increased automation and the use of robots. The company is a leading provider of robotics in China, where it’s building a new Shanghai facility to manufacture various robots.
Going forward, ABB also plans to float its growing EV charger business, which makes fast chargers for electric cars and buses. Given the rapid adoption of battery-powered EVs, sales have grown at an “average growth rate of 50% over the past five years.” Management believes the listing could take place as early as next year.
ABB stock hit a record high in recent days and currently hovers around the $37 mark. Shares have soared 32% year-to-date (YTD). They also offer a substantial dividend yield of 2.28%. Forward price-earnings (P/E) and current price-sales (P/S) ratios stand at 25.71 and 2.77, respectively. Interested readers could regard a potential decline toward the $35 mark as a better level to buy into shares.
52-week range: $59.13 – $143.72
Based in Virginia, AeroVironment is a leader in multi-domain robotics systems and related services for government agencies and businesses. For example, it provides small drones to the Department of Defense. In addition, international sales accounted for over 40% of annual revenue for the past three years (Slide 37).
AeroVironment released Q4 and fiscal year 2021 results in late June. For the quarter, revenue was flat at $136 million. Net income stood at $10.9 million as well. The company reported non-GAAP earnings per diluted share of $1.04, up from 75 cents in the year-ago period. Finally, cash and equivalents closed the year out at $157 million. On the results, CEO Wahid Nawabi remarked:
“Our team again delivered record fourth quarter and full fiscal year 2021 revenue, representing a fourth consecutive year of profitable topline growth.”
Strong results aside, another reason to like this one of the robotics stocks is that the group recently completed its acquisition of Telerob, a manufacturer of unmanned ground vehicles. Analysts expect this purchase to enhance AeroVironment’s global footprint. Telerob sells its products to 45 different countries.
So far, AVAV stock is up 19% in 2021, trading slightly above $103 per share. Nevertheless, it is roughly 28% lower than its all-time high for the year. The stock does not look overvalued, making it a reasonable option for robotics-focused investors. According to Seeking Alpha, AVAV’s forward P/E and current P/S ratios stand at 38.88 and 6.23, respectively.
Robotics Stocks to Buy: Global X Robotics & Artificial Intelligence ETF (BOTZ)
52-week range: $26.02 – $37.21
Expense ratio: 0.68%
The next entry on this list of robotics stocks is actually an exchange-traded fund (ETF). The Global X Robotics & Artificial Intelligence ETF offers investors exposure to firms benefiting from the growing adoption of robotics and AI. Such companies typically focus on the development of industrial robotics, automation, non-industrial robots and self-driving vehicles.
BOTZ, which has 36 holdings, seeks to track the INDXX Global Robotics & Artificial Intelligence Thematic Index. The ETF started trading in September 2016. Its assets under management currently stand at nearly $2.66 billion.
In terms of sectoral allocation, industrials lead the fund with 40.7%. Next in line are information technology (IT) with 35.3% and health care with 13.1%. What’s more, U.S.-based businesses comprise 42.4% of the holdings, followed by firms based in Japan (37.1%) and Switzerland (12.6%).
The top ten stocks in this ETF make up approximately 67% of assets. BOTZ’s top five companies are chip giant Nvidia (NASDAQ:NVDA), Intuitive Surgical, automated factory-equipment developer Keyence (OTCMKTS:KYCCF), ABB and Upstart (NASDAQ:UPST), a cloud-based and AI-powered lending platform.
For the past one-year period, BOTZ is up 37%. This pick has also hit an all-time high in recent days. EVs as well as increased digitalization in numerous sectors — such as retail, e-commerce, manufacturing, finance, energy and health care — have led to growth in many of its holdings. As such, buy-and-hold investors may want to wait for a dip from the current price. Look for BOTZ to go below $35 or so.
Intuitive Surgical (ISRG)
52-week range: $633.29 – $1,061.83
Next up, Intuitive Surgical develops a robotic system for assisting minimally invasive surgeries. Its “da Vinci” surgical system isn’t automated but provides surgeons with tools and instruments to perform such surgeries.
Like other robotics stocks on this list, Intuitive announced Q2 results in late July. For the quarter, total revenue increased 72% YOY to $1.46 billion, driven by growth in da Vinci procedures. Additionally, non-GAAP net income came in at $477 million, or $3.92 per diluted share, compared to $132 million or $1.11 per diluted share in the prior-year quarter. Lastly, cash, cash equivalents and investments ended the quarter at $7.7 billion. Following the announcement, CEO Gary Guthart said the following
“We are pleased with our second quarter procedure growth and financial results, which reflect both the demand for high-quality minimally invasive procedures as well as a return to surgeries deferred during the pandemic.”
This group controls nearly 80% of the robotic surgery market. Sure, the company saw a severe decline in revenue and profits during the height of the pandemic, especially in 2020. But, as the economy reopens, Intuitive Surgical will likely benefit from impressive top-line and bottom-line growth in its overall business. As such, the company is a great candidate for long-term investors looking for exposure to robotics in the health care industry.
That said, ISRG stock isn’t necessarily cheap. This stock recently hit an all-time high of $1,061.83 on Aug. 24. Up 29% YTD, it sells for around $1056 per share today. At present, ISRG stock’s forward P/E and current P/S ratios stand at 71.87 and 24.05, respectively. Potential investors might wait for a decline toward the $1,000 level to jump in.
Robotics Stocks to Buy: iRobot (IRBT)
52-week range: $67.55 – $197.40
Based in Massachusetts, iRobot builds robots for consumer use. The company uses AI-powered software to make these robots more productive in households. Perhaps iRobot’s most famous product is the automated Roomba vacuum. However, IRBT has other main products, such as the Roomba’s floor-washing counterpart, the Scooba.
iRobot announced Q2 results back in late July. For the period, revenue increased 31% YOY to about $366 million. Meanwhile, non-GAAP net income came at about $7.9 million, or 27 cents per diluted share. This was compared to a net income of $29.9 million, or $1.06 per diluted share, in the prior-year quarter. Lastly, cash and equivalents ended the quarter at nearly $416 million. On the results, CEO Colin Angle noted, “We delivered a solid second-quarter financial performance as we navigated an increasingly challenging supply chain environment.”
As you can probably tell from the numbers, this company’s production has been restrained due to the recent semiconductor chip shortage, which has impacted many industries. In addition, profitability deteriorated during the most recent quarter, primarily due to tariffs.
IRBT stock currently trades at $84, less than half of its peak value in late January. The stock is only up about 5% so far this year, having declined 32% in the past six months. However, this means iRobot has an attractive valuation for buy-and-hold investors. IRBT’s forward P/E and current P/S ratios stand at 29.26 and 1.4, respectively.
Oceaneering International (OII)
52-week range: $3.31 – $18.20
Next up on this list of robotics stocks is Oceaneering International, a company that provides engineered services and products to global offshore oil and gas, defense, aerospace and commercial theme-park companies. More specifically, this company’s Subsea Robotics segment provides remotely operated vehicles (ROVs) to customers in the energy industry for drilling support and vessel-based services.
In late July, Oceaneering announced Q2 results. For the quarter, revenue surged nearly 17% YOY to $498 million. What’s more, adjusted net income came at $2.8 million, or 3 cents per diluted share. Finally, cash flow from operations was $50.5 million and free cash flow was $37.9 million. On the results, CEO Roderick Larson said the following:
“Based on our first half financial performance and expectations for the second half of 2021, we are raising our adjusted EBITDA guidance to a range of $200 million to $225 million for the full year.”
Right now, OII stock is up 56% so far this year, mainly driven by the resumption of crude oil-related drilling operations. In fact, the company has won multiple contracts in the offshore oil and gas industry since the start of 2021. Better-than-expected sales from several of its units contributed to impressive Q2 results.
Today, shares trade in the $12 territory and the current P/S ratio stands at 0.68. Potential investors may want to consider buying the dips in OII stock.
Robotics Stocks to Buy: Raytheon Technologies (RTX)
52-week range: $51.92 – $89.98
Dividend yield: 2.41%
Closing out this list of robotics stocks is Raytheon Technologies, a leading aerospace and defense industrial company formed by the merger between United Technologies and Raytheon. This company provides advanced systems and services for commercial, military and government customers worldwide.
Raytheon recently released Q2 results this summer. For Q2, revenue went up by 13% YOY to $15.9 billion. Additionally, adjusted net income came to $1.57 billion, or $1.03 per share, compared to adjusted net income of $583 million (39 cents per share) in Q2 2020. Lastly, the company reported free cash flow of $966 million while cash and equivalents ended the quarter at $8.05 billion. CEO Greg Hayes said the following about the results:
“Raytheon Technologies delivered strong second quarter results driven by the growth in our defense businesses and our ability to capitalize on the commercial aerospace recovery.“
On top of a strong showing in Q2, this company also recently secured a $518 million contract with the U.S. Air Force for a new medium air missile system. Additionally, the company nabbed a $2 billion contract at the start of July. Raytheon’s defense-focused segment operates in a relatively stable end market. Moreover, analysts expect Raytheon’s commercial aerospace businesses to gain momentum given the potential recovery in commercial aviation.
RTX stock — which offers a generous dividend yield of 2.41% — is up almost 18% so far this year. It currently trades at about $84. Additionally, RTX’s forward P/E and current P/S ratios are 20.85 and 2.04, respectively. As such, a decline toward the $80 level would make the shares more attractive for long-term investors.
Note: This article originally appeared at InvestorPlace.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination.