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Technology Stocks : Artificial Intelligence, Robotics, Chat bots - ChatGPT
NVDA 389.46+2.5%May 26 4:00 PM EDT

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From: Frank Sully10/20/2021 1:12:32 PM
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4 Robotics Stocks to Buy Now That Amazon’s Astro Is a Thing


By Larry Ramer, InvestorPlace Contributor

My last effort at picking robotics stocks, in a column published about a year ago, proved to be quite successful.

ABB (NYSE: ABB) stock rose about 33% since my column was published, while, during the same period, Elbit Systems (NASDAQ: ESLT) climbed about 22%. Nuance Communications (NASDAQ: NUAN), which was acquired byMicrosoft (NASDAQ: MSFT) in April, jumped about 65%.

One of the two reasons that I decided to write another column about robotic stocks was the success of my picks a year ago. The other reason is a new development that I believe will give robot makers a big lift.

Specifically, now that Amazon is about to release a home robot, called Astro, I have a feeling that robots are going to become much more prevalent globally.

After all, Amazon is one of the most famous, closely followed companies in the world. So if Astro becomes very popular (and I believe that it will), many consumers and companies will likely start using robots for the first time.

There’s a precedent for such a phenomenon. That is, Amazon’s release of its Echo smart speaker led Alphabet (NASDAQ: GOOG,NASDAQ: GOOGL) and Microsoft to create similar tools. Almost 50% of Americans with a broadband internet connection owned a smart speaker as of last December.

iRobot (NASDAQ: IRBT) is certainly well-positioned to benefit from increased demand for robots, and, of course, AMZN stock can get a meaningful boost from the upcoming Astro robot.

Meanwhile, despite its rally, ABB stock remains a very good pick at this point. And with the military’s use of robotics picking up and geopolitical tensions surging, Northrop Grumman (NYSE: NOC) is a good robotics stock to buy now.

Robotics Stocks to Buy: iRobot (IRBT)

Source: Grzegorz Czapski /

The shares have dropped in recent months after the company reported lower-than-expectedsecond-quarter earnings per share and cut its full-year EPS guidance.

The chip shortage was a key reason for the company’s Q2 miss and guidance cut, and, with multiple other companies saying that the shortage is easing lately, the issue should become much more manageable for iRobot over the next three to six months.

On the positive side, iRobot’s top line came in slightly above analysts’ average estimate and surged 31% year-over-year.

What’s more, the company’s CEO, Colin Angle, said in a statement that its revenue growth was principally enabled by strong orders for mid-tier and premium floor cleaning robots from retailers in North America, Europe, the Middle East and Africa.

So the demand for iRobot’s higher-end cleaning products is generating strong, rapidly-increasing sales. It makes sens as these products carry higher margins than the company’s less expensive cheaper offerings.

“We generated solid 42% growth from the mid and premium tiers of our portfolio,” Angle said.

The company is making important technological advancements, using artificial intelligence to enable its users to instruct which objects to clean. It’s also utilizing geolocation systems to allow its robots to be instructed to clean homes when their customers are out.

iRobot is considering raising its prices, and it showed confidence in IRBT stock by authorizing, in conjunction with its Q2 results, a $100 million share buyback initiative. The stock is changing hands at a very attractive price-earnings ratio of just over 20 times analysts’ average 2022 EPS estimate.

Amazon (AMZN)

Source: Zapp2Photo /

Expected to be available to consumers before the end of 2021, the conglomerate’s Astro robot willuse capabilities that Amazon has used in its warehouses, in Prime Video and in its Alexa and Ring devices.

The mobile robot has a camera, enabling consumers to watch all parts of their homes while they’re away. The machine is the size of a small dog and can play music or TV shows on its 10-inch touchscreen, CNBC reported.

Using its facial recognition ability, Astro can deliver objects to specific people. Further, it answers questions and provides information like Alexa.

All in all, Astro sounds like a very useful mobile personal assistant, and well worth its reported $999 price tag.

Amazon may very well be able to subtly use Astro to boost its e-commerce sales. Additionally, if Astro proves to be a hit (and I think it will be), the company could sell many other robots down the road, for both consumers and companies.

In past columns, I’ve noted that I expect the company to move faster and make more effective moves under its new CEO, Andy Jassy. Further, with the shares down about 3.5% since Sept. 21, now is a decent time to buy AMZN stock.

Robotics Stocks to Buy: ABB (ABB)

Source: Daniel J. Macy /

With the automotive robotics market expected to grow at a compound annual growth rate of 11.7% between 2020 and 2027, according to one firm it’s no wonder that ABB stock has done very well over the past year.

As I noted in my last column on robot stocks, “ABB appears to be one of the largest suppliers of industrial robots in the world. According to the company’s website, it has installed more than 400,000 robots. It offers robots that perform many types of tasks for industrial companies, including glazing, gluing, painting, welding, and loading.”

For Q2, ABB reported that its sales had jumped21% year-over-year to $7.45 billion. Its top line surpassed analysts’ average outlook by $200 million.

Impressively, ABB’s orders climbed 32% year-over-year in Q2, while its operational EBITDA jumped to $1.11 billion from $651 million.

Moreover, the firm now expects its full-yearcomparable revenues to rise by just below 10%, above its previous view for a 5% increase, Reutersreported.

Additionally, the company said that the gross margins of its Robotics and Automation unit are poised to increase, while the unit is becoming less reliant on the automotive sector.

I see robotics {as} a great business and I think it has more profit potential, but…this is one of the strongest growth areas that we have in the group going forward,” ABB CEO Björn Rosengren said on the company’s Q2 earnings conference call.

Northrop Grumman (NOC)

Source: Philip Pilosian /

The U.S. military appears to be meaningfully increasing its spending on robotics.

For example, the U.S. Army is raising its expenditures on “robotic systems that could keep troops out of harm’s way” and also to increase the branch’s power in the field, National Defensereported in January.

The Army requested $379 million for robotics for fiscal 2021, up from just $17 million of funding in FY15.

Northrop Grumman, a defense and aeronautics contractor, is well-positioned to benefit from that trend, as it has a significant robotics business.

The company is working on a robotic combat vehicle. Its Remotec robots are already frequently used by the military to carry out dangerous missions, and the company has developed an autonomous robotic system that can conduct major manufacturing and assembly projects in space.

In July, the company reported stronger-than-expected Q2 results, and the contractor slightly increased its 2021 sales and EPS guidance.

In August, Morgan Stanley named NOC stock as one of its 60 “ vintage values.”

Meanwhile, China is becoming more aggressive toward Taiwan, and in the Middle East, Iran and its allies have likely been emboldened and strengthened by America’s mistake-filled withdrawal from Afghanistan.

As a result of these situations, the military spending of America and its allies is likely to climb meaningfully, benefiting Northrop Grumman.

Also worth noting is that the “space race” appears to be picking up, with the U.S. launching many satellites, the space tourism industry launching, and America starting its Space Force.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Larry Ramer has conducted research and written articles on U.S. stocks for 14 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 GE, solar stocks, and Snap. You can reach him on StockTwits at?@larryramer.?
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