Robotics and automation are taking center stage now that companies far and wide have renewed their focus on replacing human labor with low-cost machines.  The push to automate nearly every aspect of business has never been stronger as human laborers have been quarantined amidst the coronavirus pandemic.

Furthermore, robotics will help companies create the social distance necessary to reduce the spread of the virus at manufacturing facilities. Savvy investors will take note of this powerful trend and invest in robotics stocks rather than “rage against the machine.”

In particular, Rockwell Automation (ROK), Cognex (CGNX) and AGB Ltd. (ABB) are likely to benefit from the renewed momentum toward automation.

Rockwell Automation (ROK)

Industrial automation, motion control solutions and digital transformation.  Sounds a lot like the future, doesn’t it?  These are ROK’s specialties.  The company sells industrial automation software and hardware.

ROK automation components will propel the company to an expected 4% increase in sales in the upcoming year along with a potential 10% improvement to the bottom line.  ROK dividend payouts have skyrocketed nearly 70% across the past half-decade.  ROK has nearly doubled in price since falling to a shockingly low $120 amidst the COVID-19 selloff.

Though ROK is certainly pricey, selling for more than $200 per share, its solutions will be that much more in demand now that companies far and wide are challenged with performing production with as few humans as possible – or at least socially distancing a comparably small workforce to mitigate the spread of the virus.

If you are uncertain as to whether ROK belongs in your portfolio, consider the insights provided by the POWR Ratings.  ROK is ranked #1 of 59 stocks in the industrial – machinery category with As in every single POWR Rating component but for its Industry Rank of B.

Cognex (CGNX)

Thanks to machine vision, it is now possible to automate a considerable portion of manufacturing processes.  CGNX provides such machine vision technology, empowering robot workers to expedite and improve manufacturing processes.   The POWR Ratings have CGNX rated as an “A” meaning Strong Buy, with As in all POWR components but for its industry rank.

CGNX is rated third of 59 companies in the industrial – machinery space.  The shrinking auto market will be offset by the potential spike in consumer electronics sales so CGNX investors should not panic even though half the company’s sales come from these two segments.  Furthermore, the majority of CGNX sales are generated in the middle and later parts of the calendar year so the stock is likely to build momentum as the economy reopens.

Buy CGNX, hold it for years and you will likely be quite happy with the results.

ABB Ltd. (ABB)

Manufacturers in nearly every industry are looking for total control systems that automate processes for the utmost efficiency.  ABB makes these systems for food processors, car companies, materials businesses and a litany of other enterprises.  This robotics and automations specialist has not yet bounced back to its pre-coronavirus trading level of $24 yet it is slowly inching upward.

The sale of ABB’s power grid unit has hastened production of high-tech equipment including optical sensors and robots that assemble parts with remarkable accuracy and efficiency.  This means ABB is poised to grow fairly quickly, possibly reaching or even eclipsing the analysts’ high target of $21.61 by the halfway point of 2021.

ABB has an expected annual growth rate of 10.5% while its industry as a whole is expected to endure an earnings decline of 11.7%.  With a forward P/E ratio slightly above 13, ABB provides an attractive combination of solid value and growth potential, making it a suitable candidate for just about every investor’s portfolio in 2020 and possibly for years to come.

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ROK shares rose $4.57 (+2.26%) in premarket trading Tuesday. Year-to-date, ROK has gained 0.81%, versus a -7.67% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...

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