KTOS - The Invisible Hand of AI: 3 Robotics Stocks Shaping the Future

2024-05-17 11:31:31 ET

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

The S&P 500 and Nasdaq Composite are back in familiar territory, jumping to record highs yesterday. Led by a soft April U.S. consumer inflation print, Mr. Market is now pricing in a couple of rate cuts before 2024 draws to a close. With the market’s risk appetite growing again, it’s an opportune time to load up on the best robotics stocks to buy.

In some of my recent articles, I’ve highlighted AI and robotics as powerful multi-year trends disrupting industries for the long haul. Particularly with robots, we are likely to see a shift from being programmed to becoming learning systems. These step changes will lead to massive advancements in how robots communicate and interpret the physical world. Additionally, computer use will expand dramatically in a scenario where natural programming language becomes common. These groundbreaking advancements will propel robotics into widespread use as they evolve remarkably.

Robotics Stocks to Buy: Intuitive Surgical (ISRG)

Intuitive Surgical (NASDAQ: ISRG ) is one of the top bellwethers in robotics, with a leadership position in robotics-assisted surgery. It has been remarkably consistent, maintaining over a 20% net income margin in the past five years.  Similarly, its top-line growth has been impeccable, boasting 14% growth over the same time horizon.

Covid put a damper on its top-and-bottom-line growth, but recent results have shown that it’s past those headwinds. The past few quarters have seen Intuitive blow past top-and-bottom-line estimates, posting stellar expansion in net income. In its first-quarter (Q1) earnings print, net income shot up to $547.4 million , significantly from $360.8 million from the prior-year period. Additionally, revenues were up to $1.9 billion, an 11% bump from the same period last year, with a 16% increase in da Vinci procedures year-over-year (YOY). The substantial patient treatment backlogs in China post-pandemic led to a significant surge in procedures last year.

All eyes are on the release of the release of the Da Vinci 5 robot next year, perhaps one of the biggest catalysts moving forward. The firm touts the new system’s “computing power,” claiming it is “10,000 times” greater than the earlier da Vinci Xi model.

Kratos (KTOS)

Kratos (NASDAQ: KTOS ) is a leading defense solutions provider that continues to revolutionize its military operations through its deep product portfolio. It’s actively involved in robotics, specializing in producing and deploying advanced unmanned systems.

Over the past decade, Kratos has been an incredibly rewarding investment, delivering more than 180% returns . However, results over a more narrow time period, such as in the past five and three years, have been in the red. However, it jumped impressively last year, generating almost a 50% gain for its shareholders. Moreover, recent results have shown that the stock is still in favor of investors, pointing to a strong upside ahead as it continues delivering on the operational front.

It followed up its excellent streak of top-and-bottom-line beats with another solid quarter, where its revenues surged 20% to $277 million . Moreover, its EPS of 11 cents comfortably blew past estimates by six cents. Additionally, its consolidated book-to-bill ratio stands at 1.1 to 1 and remains remarkably healthy.

The ratio indicates that Kratos books $1.10 in new orders for every dollar billed. Hence, it points to robust demand for the company’s products and services, suggesting a spectacular long-term growth runway ahead.

Global X Robotics & Artificial Intelligence (BOTZ)

The AI and robotics fields encompass a laundry list of subcategories, which can be incredibly overwhelming for investors. From machine learning to humanoid robots, multiple companies are involved in driving innovation in both sectors. Hence, for investors looking to gain exposure to both sectors with just one investment, look no further than the BOTZ ETF.

With investments in 43 different companies involved in AI and robotics, the BOTZ ETF has holdings in ABB Ltd . (OTCMKTS: ABBNY ), SMC Corp . (OTCMKTS: SMCAY ), and UiPath Inc. (NYSE: PATH ) to name a few. Moreover, with an expense ratio of 0.69%, it presents itself as a relatively cost-effective investment compared to others in the niche.

Additionally, the ETF has been incredibly rewarding investment over the years, generating almost 61% returns and beating the sector median by 51%. In the past year alone, it gained 24%, beating other ETFs by 58%. With the headwinds clearing, expect the BOTZ ETF to continue offering attractive gains.

On the date of publication, Muslim Farooque 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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