Published on August 22nd, 2019
This is a guest contribution from Carl Delfeld, Chief Analyst of Cabot Global Stocks Explorer.
Before I introduce my favorite robot stock, let me first tell you about one of my favorite television series growing up, “The Jetsons.”
The storyline was to imagine what life would be like a century later, in 2062.
Here we are a bit more than half a century later, and many of the gadgets in the show still seem fanciful—consider the Jetson space car folding neatly into a briefcase, or the pill you could take for dinner.
On the other hand, the Jetsons’ robot maid “Rosie” highlights an area where we seem to be well ahead of the game.
Take Boston-based iRobot’s “Ava,” a 5-foot-plus robot with an iPad tablet for a brain and Xbox motion sensors to help it navigate around a kitchen or living room.
iRobot (IRBT) is a volatile stock but the company has already sold millions of disc-shaped Roomba vacuum cleaners, and has robots that will clean your pool or cut your lawn.
The military is a key player in the growth of robotics and its bomb disposal robots have protected soldiers in Iraq.
The robot market for the health sector also looks promising. iRobot recently expanded a partnership with InTouch Health, a small company that enables doctors at computer screens to remotely treat stroke victims and other patients.
And if you’ve seen an Amazon distribution warehouse of late, you’ve seen thousands of robots moving around like ants filling orders and managing inventory.
A Japanese Robot Stock
In my work, I am constantly exploring, researching and evaluating emerging investment opportunities with high-profit potential that leverage global markets, technologies and resources. That process led me to the other player in this dynamic market with explosive growth potential.
ABB Ltd (ABB) is a familiar European multinational that manufactures electrification, industrial automation, and robotics and motion products worldwide.
But you may not be aware of Fanuc (FANUY), a Japanese blue-chip stock with zero debt, a sterling reputation, and a storied past.
Headquartered in the shadow of Mount Fuji, Fanuc is the world’s leading manufacturer of computerized numerical control (CNC) devices that are used in machine tools and also serve as the “brains” of industrial robots.
Fanuc, whose name is an acronym for Fuji Automatic Numerical Control, 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.
Fanuc offers investors a pristine balance sheet with zero debt and a whopping $7 billion in cash. Profit margins are impressive.
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.
Industrial robot manufacturer Shanghai-Fanuc Robotics Co. Ltd. has a plant in Shanghai’s Baoshan district. Fanuc claims to be the only company that uses robots to make robots.
Much of the company’s sales are channeled through GE Fanuc, a 50-50 automated machinery joint venture with General Electric Company (GE).
Fanuc does most of its manufacturing in Japan. Fanuc is building a new factory near Tokyo to double its domestic output capacity of machine tools to produce parts of smartphones.
As for Fanuc’s stock, it’s up 15% so far in 2019 and its conservative management and penchant for maintaining high margin and quality products makes it a fine core holding.
In short, Fanuc is a high-quality play on what seems to be an unstoppable trend. I will continue following this Japanese robot stock with keen interest as one of the high-potential global stocks that I am tracking, and suggest it for your consideration as well.
The robust U.S. population, economy, and stock exchanges are incredibly important but they are not the majority and the faster-growing economies, companies, and stocks around the globe are great opportunities. Opening your eyes to these global stocks will both diversify your risk and profit.
Carl Delfeld is a former investment banker and advisor to the U.S. Congressional Joint Economic Committee, the U.S. Department of the Treasury, and a member of the U.S. National Committee on Pacific Economic Cooperation. He is the Chief Analyst of Cabot Global Stocks Explorer, published by Cabot Wealth Network, which boasts an average return of better than 19% as of this writing. CabotWealth.com