Automation Aces: 3 Top Robotics Stocks to Command Your Portfolio
Robots have many advantages for companies and for society. Companies are benefitting tremendously from their ability to perform many tasks at a fraction of the cost of humans. Moreover, unlike humans, firms don’t have to worry if robots are working too many hours, if they are satisfied with their positions, or if they will leave to go work for another company. Meanwhile, society benefits from robots’ ability to meaningfully reduce inflation and enable firms to charge lower prices for their products.
Also noteworthy is that robots will free humans from the need to perform the most repetitive, boring jobs, enabling them to be more creative and entrepreneurial while enjoying more leisure time. Finally, in some areas, such as warfare and medicine, robots can save lives, either by eliminating the need for humans to carry out life-threatening missions or by assisting healthcare professionals.
Given these points, I’m convinced that robots will continue to proliferate widely for the foreseeable future. For investors who want to exploit the latter trend, here are three top robotics stocks to buy.
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Symbotic (SYM)
Source: shutterstock.com/sdecoret
Symbotic (NASDAQ:SYM) provides “robotics and software” used to automate functions within warehouses. According to the firm, its products can save companies $250 million per warehouse in 25 years. Firms tend to be very enthusiastic about products that can save them significant amounts of money, boosting their bottom lines in the process.
Moreover, Symbotics’ products have been to a large extent validated as the firm has a contract with Walmart (NYSE:WMT) which currently accounts for the lion;s share of its sales. But Symbotics has also made deals with two other huge firms: Target and Albertsons, a large drug-store chain.
And with e-commerce continuing to grow rapidly, the number of warehouses utilized by firms is likely to continue to increase meaningfully in the coming years, significantly lifting SYM’s total addressable market.
On Feb. 5, Symbotic reported impressive fiscal first quarter results as its top line soared 79% versus the same period a year earlier to $368 million. What’s more its EBITDA, excluding certain items, increased to $14.1 million from $13.3 million in the same period a year earlier.
The firm’s forward price-sales ratio of 9.4 times is high, but the shares are still attractive due to the company’s rapid growth and huge opportunity.
Symbotic has more potential than any of the other robotics stocks that I’ve encountered.
Kratos Defense & Security Solutions (KTOS)
Source: Phonlamai Photo / Shutterstock.com
According to one source, autonomous drones “are considered robots because they are autonomous entities capable of decision-making and action, similar to traditional robots.”
As I noted in a previous column, Kratos‘ (NASDAQ:KTOS) “advanced jet drones have ‘sensor and weapon system payloads'” that enable them to autonomously attack enemy targets. And somewhat validating these autonomous drones/robots, the Pentagon purchased two of them for $15 million in January 2023.
Also noteworthy is that, on Feb. 14, Kratos reported impressive fourth-quarter results as its top line jumped 10% versus the same period a year earlier to $274 million Additionally, its EBITDA, excluding certain items, came in at $29.1 million, up from $19.2 million in Q4 of 2022.
During its Q4 earnings conference call, the firm indicated that the Air Force was testing one of its autonomous drones and could decide to purchase more such offerings from the company.
The forward price-sales ratio of KTOS is just two which is quite attractive.
Intuitive Surgical (ISRG)
Source: Blue Planet Studio / Shutterstock
Intuitive Surgical (NASDAQ:ISRG) reported strong Q4 results on Jan. 23, indicating that the demand for its surgical robots is rapidly growing.
Specifically, its top line jumped 16% versus the same period a year earlier while its earnings per share climbed to $1.69 versus 91 cents in q4 of 2022.
In January, Citi named ISRG stock as one of its favorite large-cap names.
Also importantly, ISRG has sought approval from the Food and Drug Administration for a ” version of its robotic surgical system” that will have “10,000 times more processing power than its (current) products for data collection, analytics, and other key functions,” Seeking Alpha reported.
As a result, the system is likely to be much more efficient and capable than its predecessor, making the offering meaningfully more attractive to hospitals.
ISRG’s forward P/E ratio of 61 is quite high but justified by its tremendous growth opportunities.
On the date of publication, Larry Ramer did not hold (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.
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.
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