4 Ways to Invest in Robotics You Should Know About

Robotics was a growing industry long before the arrival of Covid-19 -- the global pandemic, however, will fuel additional research and interest in this area. Several leading advisors -- and contributors to MoneyShow.com -- highlight companies using robotic technology for surgeries, manufacturing and even for building other robots. Carl Delfeld, Cabot Global Stocks Explorer While you have seen a multitude of stories about the rise of robots in manufacturing as well as everyday life, you may not be aware of Fanuc (FANUY), a Japanese blue chip with zero debt and a sterling reputation. Fanuc is the world's leading manufacturer of computerized numerical control devices that are used in machine tools and also serve as the brains of industrial robots. Fanuc claims to be the only company that uses robots to make robots. Fanuc has been a world leader in robotics since the early 1970s. It was founded as a wholly owned subsidiary of Fujitsu in 1955 after that electronics giant decided to enter the factory automation business. Today, Fanuc is as global as it gets with over 240 joint ventures and offices in over 46 countries with a commanding 65% share of its world market. Fanuc should benefit from robust demand from developed markets as well as China as its manufacturing wages continue to increase and manufacturers look to robots to increase productivity. You can find Fanuc robots at warehouses at Amazon as well as the shop floor of General Motors . Use of industrial robots has allowed companies like Panasonic to run factories that produce 2 million plasma television sets a month with just 25 people Much of the company's sales are channeled through GE Fanuc, a 50-50 automated machinery joint venture with General Electric . Fanuc does most of its manufacturing in Japan, and is building a new factory near Tokyo to double its domestic output capacity of machine tools to produce parts of smartphones. I have been following Fanuc's stock for some time but it always seemed expensive. With the pullback in the market, now may be a great entry point as the stock at some of its lowest prices in a decade. Fanuc offers investors a pristine balance sheet with zero debt and a whopping $7 billion in cash. Profit margins are impressive and Fanuc also bought back 72 million shares last month. In short, Fanuc is a high-quality play on what seems to be an unstoppable trend. For now, we recommend buying half of our intended position. Gordon Pape, Internet Wealth Builder Months of sheltering in place will fundamentally change our lifestyles and will continue to influence the way we live and do business, long after the coronavirus is history. One trend will be an accelerated move to robotics. Robots can't catch Covid-19, or anything else. While the rest of us stay home, they can keep factory output going with a minimum of human intervention. This trend is already been well established. In mid-2019, a report from Oxford Economics projected that 20 million manufacturing jobs around the world will be taken over by robots by 2030. That could accelerate as the world emerges from the crisis, although much will depend on how much capital spending businesses can afford. The rise of robotics is a two-edged sword. On the one hand, it will improve productivity and reduce the economy's vulnerability to future pandemics. On the other, it will leave millions of people without work. Managing that crisis will be a real challenge to business and governments. One of the companies that should benefit when this trend takes hold is ABB Group . It's is a Swedish-Swiss company based in Zurich that trades as an American Depository Receipt (ADR) on the New York Stock Exchange. The company is a world leader in robotics, industrial automation, clean energy, and software development. The stock has not performed well recently but the company appears to be well positioned to emerge as a winner in the post-coronavirus world. Kevin Huang, CFRA Research Stryker Corporation , a leading medical devices company, carries CFRA's highest recommendation of 5-STARS, or Strong Buy. We view Stryker favorably because it is a large, diversified supplier of reputable medical devices and supplies, making it a preferred vendor for the hospital industry, which has been consolidating in recent years. In the long run, we think that the company can maintain a low-double digit earnings growth rate because of its operational discipline, experience with M&A integration, and strong competitive position in orthopedic robotics. As of December 31, 2019, SYK's capital structure was sound, with a net debt to total capital ratio of 29% and a leverage ratio (net debt to trailing EBITDA) of 1.7x. We view SYK's orthopedics business as an area of strength and opportunity because of SYK's MAKO robotic offering. SYK's MAKO robotic orthopedic system first received FDA approval in 2008 for partial knee arthroplasty procedures. The MAKO system expanded to include partial hip, total hip and total knee arthroplasty (i.e. TKA) by 2015. As a result, SYK has had plenty of time to gather data on robot-assisted knee procedures and to gain the acceptance of orthopedic surgeons. SYK's early foray into the robotic orthopedic market has allowed the company to establish a dominant reputation and position that will be difficult for competing products of equal or lesser value to overcome, by our analysis. We anticipate that the continued competitive strength of SYK's MAKO robots will continue to drive share gains for SYK in the traditionally stable knee and hip replacement markets. In 2019, approximately 55%-60% of Mako placements were in competitive accounts, up from 40%-50% in 2018. We think the company's recent success will enable it to further expand its presence into other types of robotic orthopedic surgery (e.g. shoulder). In addition, the success of MAKO has likely and will likely continue to lead to cross-sales of SYK's non-orthopedic products because hospitals prefer to limit the number of vendors that they purchase from, in our opinion. We recently lifted our opinion on shares of SYK to Strong Buy from Buy because we think that shares have been oversold in response to Covid-19 concerns. While we expect Covid-19 to negatively impact elective procedure volumes in 2020 and hence SYK's sales, we don't think the impact of Covid-19 to long-term share values is as substantial as the recent decline in shares has been. Our 12-month target price of $234 reflects a multiple of 26x our next-12-month EPS estimate of $9.00. Risks to our recommendation and target include pricing pressure, intensified competition, and weaker-than expected medical procedure volumes. David Toung, Argus Research We are reiterating our buy rating on Zimmer Biomet Holdings , the nation's largest pure-play maker of orthopedic devices. Despite Covid-19-related headwinds to procedural volumes, the company has made very good progress in resolving product supply issues. We also see the ROSA robotics system and new product launches as drivers of orthopedics sales growth. Zimmer is a leader manufacturer of orthopedic implants. Given the demographic trends of an aging population, we see orthopedics as a long-term growth market. Zimmer is experiencing a sharp and sudden global decline in elective surgeries that is slowing its orthopedics business. It now expects first-quarter 2020 revenue to fall 8.5%-9.5%. With the decline expected to continue in the second quarter and continued uncertainty over the scope and duration of the Covid-19 pandemic, the company has withdrawn its financial guidance for 2020. Nonetheless, we believe that elective procedures, such as orthopedic joint replacements, are being deferred, not cancelled. This may lead to an increase in procedures, and associated strong demand for implants, later in 2020. The return of procedural volume is also dependent on easing the burden of hospitals that must care for Covid-19 patients and on returning operating room and bed capacity to elective procedures. Zimmer reports first-quarter results on May 11; in light of Zimmer's preannouncement for the first quarter and the withdrawal of its 2020 guidance, we are reducing our adjusted EPS estimates to $7.55 from $8.32 for 2020 and to $8.40 from $8.92 for 2021. Given the recent market volatility related to the coronavirus, we are lowering our price target to $135.

4 Ways to Invest in Robotics You Should Know About

Robots can't catch Covid-19, or anything else. While the rest of us stay home, they can keep factory output going with a minimum of human intervention.

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