6 Ways to Profit From the Rise of the Robots
I’m still not used to that person-less floor cleaner at Sam’s Club.
If I see that thing roaming the aisles, I will completely change the route I’ve planned for my shopping trip.
I mean, it has decent manners. I saw it stop and wait patiently behind a lady looking through some boxes of cookies.
But then its Revolutions Per Minute (RPMs) changed, and I couldn’t help but hear a hint of frustration in the tone. Perhaps it secretly wanted to mow her down so it could finish its task at hand.
(I’ve been told that I have an overactive imagination …)
No matter what my opinion of robots is, they are here and they are only going to continue to become more popular.
In my article last week about 5G, I pointed out that the current 21.5 billion devices connected to the Internet of Things (IoT) is expected to turn into 30.9 billion by 2025.
• Robots are one of those. And 5G helps unlock quicker processing that makes robot integration safer for everyone.
So today, I set out to look for some “Buy”-rated robotics companies.
The Weiss Ratings make it easy to search for “Buy”-rated companies. However, this one isn’t as easy as running a stock screen. That’s because robotics companies can fall into many different sectors.
Some are intended for industrial applications. Meanwhile, some are considered consumer discretionary. And others are in the healthcare sector.
• This is just further proof that robotics isn’t just a trend.
It is, in fact, a way of the future that will be apparent in many facets of our lives. They are here to handle dull, dirty, dangerous and delicate work for humans.
So I did a little manual labor of my own and searched several sectors for top-rated robotics stocks.
I only saw three that are rated as a “Buy” right now.
Here they are …
1. Intuitive Surgical
Intuitive Surgical (Nasdaq: ISRG), the highest-rated robotics company on the list with a “B+,” is the pioneer and leader in robotic-assisted, minimally invasive surgery.
Specifically, it’s behind the da Vinci and Ion surgical systems and related instruments and accessories. (There are now over 6,335 da Vinci surgical systems worldwide.)
In the company’s recent earnings call, instruments and accessories revenue increased by 73%. More systems means that more surgeries are being performed. And, apparently, the surgeons are happy since they continue to buy the accessories and instruments.
This is a great example of robots taking over delicate work. The robot is easier to sterilize and can make more precise movements. And no one is going to say no to a surgery that’s less invasive.
The company’s seen shares jump 28% over the past year and 87% over the past two years.
ABB (NYSE: ABB) is looking toward the future by connecting software to its electrification, robotics, automation and motion portfolio.
You’ll find its industrial solutions in data centers, automotive production, power generation, smart cities, mining and many others.
It’s determined to be involved in all the big future trends … and its succeeding.
In April, the company finally made its way into the “Buy” range and held it after its earnings per share and earnings before interest and taxes (EBIT) improved. Now, it sits at a solid “B” rating.
The company pays a dividend of 1.5%. Shares are up 25% over the past year and 86% over the past two years.
3. Deere & Company
Deere & Co. (NYSE: DE) has been around since 1837, and it’s not going anywhere any time soon. We’ve heard the phrase innovate or die.
Well, DE has always taken that to heart and stayed at the forefront of what tractor owners want and need … and right now, that’s autonomous tractors equipped with artificial intelligence (AI).
In 2017, the company acquired Blue River Technology for its intelligent weed-killing robots. And just two months ago, Deere announced it would acquire Bear Flag Robotics for $250 million. The company already works with Bear Flag Robotics, but it will now be part of the Deere family.
Bear Flag retrofits regular tractors with sensors, control systems and the works, so they can operate autonomously. This could let one lone farmer oversee a fleet of tractors.
There are already tractors that can follow a GPS-guided path, but this technology removes a person from the tractor cab entirely (just like my nemesis, the Sam’s Club floor robot). These tractors can also be equipped with the technology to analyze soil and use AI to minimize crop failures.
The company currently pays a 1.09% dividend and shares are up 24% year to date.
See what I mean? Three big robotics players all in completely different industries. All three of them are set to be wildly successful and don’t compete with one another.
There are so many other cool companies to watch right now. If you’re big into the robotics trend of the future, you might want to add the next three, which are all “hold”-rated companies, to your watchlist.
When we talk about consumer robots, iRobot (Nasdaq: IRBT) is one of the most popular names. The company offers Roomba vacuuming robots, Braava floor mopping robots and Root robots to help children learn to code.
The company’s been struggling in the “hold” and “sell” range for the majority of the past two years. The exception being 16 days this past April, when it snuck up and held a “B-” buy status. It now sits at a “C-” … and we could see that move either way.
The company doesn’t pay a dividend, and although shares are up 2% so far this year, they’ve slid 30% in the past six months. If we can see the rating trend reverse, this slide could allow us to get in for a good price … but only if we see its rating start to climb again.
5. HollySys Automation Technologies
HollySys Automation Technologies (Nasdaq: HOLI) is one to watch because the China-based company provides automation solutions in the People’s Republic of China, Southeast Asia, India and the Middle East. The company serves customers in the industrial, railway, subway, nuclear power, mechanical and electronic industries.
That’s a very specific geographical region, and a very specific industry of customers. And it seems to have a lockdown on that market.
But right now, the company only has a “C” rating. In fact, it hasn’t held a “buy” rating since 2016, but maybe that’s going to change …
Since May, the company’s been steadily climbing up from a “D+” … and I’m curious to see if it can make it back to a “C+” — which it hasn’t held since 2019.
The company pays a dividend of 1.02% and shares are up 33% so far this year.
6. Robo Global Robotics and Automation Index ETF
As Robo Global Robotics and Automation Index ETF’s (NYSE: ROBO) name suggests, this exchange-traded fund (ETF) tracks the ROBO Global Robotics and Automation Index. That means 80% of the fund’s assets are part of that index, including companies related to robotics, automation and AI.
The ROBO fund has been around since 2013 and currently holds 43% U.S. stocks and 56% non-U.S. stocks. Some of the top holdings are Brooks Automation (Nasdaq: BRKS), iRhythm Technologies (Nasdaq: IRTC) and iRobot.
The fund currently pays out a dividend yield of 0.18%. Shares are up 4% this year and 24% over the past 12 months.
Please remember: This isn’t a comprehensive list of robotics companies.
• And as the robotics trend continues, more and more companies will jump onboard.
It’s a trend that we need to keep an eye on for the rest of the year and into 2022 … especially as we continue to see 5G expand its capacity for connecting more and more devices.