ROK - 3 Robotics Stocks to Buy as Musk Teases Tesla Bot

2024-07-15 06:00:00 ET

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

No stranger to chronically optimistic claims, Tesla (NASDAQ: TSLA ) CEO Elon Musk has been making waves recently regarding the role that humanoid robots can play in the broader economy. At the electric vehicle manufacturer’s annual shareholder meeting, Musk stated that such robots could lift TSLA’s market capitalization to $25 trillion. If so, it may be a good idea to consider robotics stocks to buy.

I’m going to be skeptical about the $25 trillion claim. However, the robotics ecosystem itself stands as one of the most relevant in the broader tech sphere. According to Precedence Research, the sector worldwide enjoyed a valuation of $72.17 billion in 2022 . By 2032, the space could be worth $283.19 billion, implying a compound annual growth rate (CAGR) of 14.7%.

Even better, the canvas offers a diverse set of opportunities for investors. It’s not just about focusing on the robots themselves but the various software and hardware that makes such innovations possible. With that in mind, below are compelling robotics stocks to consider.

Rockwell Automation (ROK)

A global leader in industrial automation and information technology, Rockwell Automation (NYSE: ROK ) provides hardware and software solutions that help companies optimize their manufacturing processes through various digitalization solutions. Fundamentally, Rockwell can leverage its expertise in industrial automation, bringing about net productivity gains for enterprises.

Now, it should be noted that analysts aren’t exactly keen on ROK stock at the moment. Notably, shares have lost more than 10% of equity value since the beginning of the year. Further, in the past four quarters, the company printed an average earnings per share of $2.80. This unfortunately missed the average consensus target of $2.86, translating to a negative earnings surprise of 1.63%.

However, there is some good news here and that’s the valuation. Shares trade at 26X trailing-year earnings and 3.4X trailing-year sales. But between the first quarter of 2023 to Q1 2024, the metrics stood at 27.55X and 4.08X, respectively.

Analysts anticipate rough waters throughout fiscal 2024. By 2025, however, EPS could jump 18.33% to $12.01. Sales could rise to $9.09 billion, up 5.7%. It’s one of the robotics stocks to consider.

Zebra Technologies (ZBRA)

Based in Lincolnshire, Illinois, Zebra Technologies (NASDAQ: ZBRA ) falls under the communication equipment industry. It provides enterprise asset intelligence solutions in the automatic identification and data capture industries. Thanks to its vast acumen, Zebra is relevant for multiple applications, including mobile computing and RFID technology. Because advanced robots need to track various protocols in real time, Zebra can complement autonomous systems for enhanced productivity.

What makes the company stand out is the underlying financial performance. While not remarkable, it quietly gets the job done. In the past four quarters, Zebra’s average EPS came out to $2.18. This beat the average analysts’ consensus view of $2.05, translating to an earnings surprise of almost 7%.

However, it must be said that the extra performance has translated to a valuation premium. Specifically, shares trade at 3.85X sales. That’s a bit higher than the prior year’s average multiple of 2.8X.

Still, it’s encouraging that analysts anticipate EPS growth of 22% to $11.97. For the top line, they’re looking at sales of $4.77 billion, up 4.2%. Sales could move up another 7.5% to $5.13 billion next year, making ZBRA one of the robotics stocks to consider.

Teradyne (TER)

Falling under the semiconductor equipment and materials industry, Teradyne (NASDAQ: TER ) is one of the most important players among robotics stocks. Per its public profile , Teradyne designs, develops, manufactures and sells automated test systems and robotic products worldwide. Its automated solutions are deployed in the manufacturing field for tasks that require both flexibility and safety.

Essentially, Teradyne isn’t about creating a rival invention to the wheel; rather, it’s taking the wheel that we already have and making it that much better and thereby more economically productive. One of the clear advantages of investing in TER stock is the underlying financials. In the trailing year, Teradyne’s average EPS hit 72 cents, beating the consensus view of 61 cents.

To be fair, such a grand performance comes at the cost of valuation premiums. Right now, shares trade at 60.5X earnings and almost 10X sales. In the past year, the metrics sat at 30X and 6.25X, respectively.

Still, analysts see progressive growth in fiscal 2024 and especially 2025. By the latter, EPS could rise to $4.83 while the top line could swing up to $3.4 billion. That’s a significant improvement over 2023’s results of $3.11 and $2.68 billion, respectively.

On the date of publication, Josh Enomoto did not have (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 .

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