We mentioned above the robotics companies could be key beneficiaries of accelerated capex spending made by U.S. corporates flush with cash from bond and equity raises last year.
A Bain Capital reports notes that between now and 2030, American companies are expected to invest some $10 trillion into automation. The pandemic has opened a window for companies to do some radical rethinking about how they go about their business without their shareholders breathing down their necks about every penny of earnings in the most recent quarterly report. A catastrophic exogenous event has some benefits, and that could include a lot of spending on robots. (It could also include a lot of balance-sheet massaging to bury past missteps, but that is a topic for another discussion.)
Warehouse and factory are two areas where, like in many businesses, 2020 represented a desperate attempt to do more without as many humans working together in close quarters. Robotics workhorses here are not the dancing droids of viral YouTube fame, but more like the humble self-moving pallets highlighted by GM’s Mary Barra in a recent presentation. Industrial robotics firms such as Fanuc [Japan: 6954] and Rockwell Automation [ROK] are worth investors’ attention. Should the manufacturing reshoring trend that began under President Trump continue under President Biden, American manufacturers will be looking both for stand-alone robots, and for assistant robots to work with individual humans.
The same is true for logistics. Analysts believe that fully automated e-commerce fulfilment centers will grow dramatically in 2021 — the ideal and end goal being so-called “lights off” warehouses that function with no humans on the warehouse floor. An integral component of the robotics push will be sensing components — robots’ “eyes” and “ears,” many of which are made by smaller manufacturers such as Lumentum [LITE] and II-VI [IIVI].
Investment implications: Robotics will be a lasting tech trend. Both the large robotics leaders and smaller component manufacturers can benefit, and are worthy of investors’ attention. Robotics-focused ETFs are also available.
Please note that principals of Guild Investment Management, Inc. (“Guild”) and/or Guild’s clients may at any time own any of the stocks mentioned in this article, and may sell them at any time. In addition, for investment advisory clients of Guild, please check with Guild prior to taking positions in any of the companies mentioned in this article, since Guild may not believe that particular stock is right for the client, either because Guild has already taken a position in that stock for the client or for other reasons.
