From Science Fiction to Reality: 3 Robotics Stocks for Automatic Riches

Stocks to buy

Robotics stocks should be a leading investment theme throughout the 2020s. The concept of automating factories, warehouses and data entry work has long appealed to large corporations. Increasingly, the tools are ready for primetime and investors can stand to benefit.

Adding to that, artificial intelligence has taken off in recent years. Now, these sophisticated automation systems can be paired with AI engines.

Admittedly, there’s a bit of a blurry line around the exact definition of a robotics stock today. Take a leading sector exchange-traded fund, the $2.7 billion Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ), for example. It prominently features both robotics and AI within its fund.

While these may seem like different investment themes, there is a chicken and egg question. What good is a robot that doesn’t have some form of AI to help direct its actions? Artificial intelligence, on the other hand, also has more utility when paired with a physical entity.

All this to say that there’s a wide range of companies that can fit within the concept of robotics stocks. These are three robotics leaders covering different niches within the space, helping with factory automation to software robots and other tasks.

Columbus McKinnon (CMCO)

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Columbus McKinnon (NASDAQ:CMCO) offers one of the most compelling ways to ride the automation wave. That’s because Columbus McKinnon is a leader in automation and robotics solutions for warehouses. Notably, Amazon (NASDAQ:AMZN) invested heavily in warehouse robotics, giving it a huge lead in e-commerce fulfillment, and now the rest of the retail industry is scrambling to catch up.

This should give Columbus McKinnon many opportunities for growth over the next decade. The company is a leader in making the physical tools necessary for building a 21st century automated warehouse. Think of items such as conveyor belts, hoists, rigging tools and motion-control systems.

Given the surge in labor costs since the pandemic, companies are willing to spend heavily on labor-saving solutions. It’s not just warehouses, either. With the reshoring phenomenon and renewed interest in North American manufacturing, a new wave of smart factories will utilize Columbus McKinnon’s automation solutions for industrial purposes as well. This has caused the share to go up about 27% in the past year.

UiPath (PATH)

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UiPath (NYSE:PATH) is a company that finds itself right at the crossroads of automation and AI. The firm is a leader in robotic process automation, which is a toolset that helps company automate routine tasks.

Essentially, the idea is that UiPath’s platform offers clients an easy-to-use way to set up, operate and manage software robots that can effectively mimic basic human activities. These could cover areas such as data entry, invoice processing and e-mail management, among others.

Basically, RPA systems help employees manage repetitive tasks, allowing human workers to spend more time on higher value-added activities.

The rise of generative AI has made some people think these sort of automation functions can spring up overnight. But in practice, these types of software tools tend to be iterative and get a little better with each and every year.

UiPath was founded back in 2005, giving it almost two decades of experience in the RPA field. This gives it a huge head start against the newer field of emerging automation-focused AI rivals.

For its already-concluded fiscal year 2024, UiPath generated more than $1.3 billion in revenues and analysts see more growth from here. The company also just reached profitability, putting it ahead of many rivals.

Procept BioRobotics (PRCT)

Source: Shutterstock

Procept BioRobotics (NASDAQ:PRCT) is a health care equipment company focused on robotic surgical systems.

This is an attractive market for the robotics and automation space. Computer-aided surgical tools can offer greater precision for certain types of procedures, while also enabling remote medicine in cases where an on-site human surgeon may not be physically available.

For Procept specifically, it manufactures and services the AquaBeam Robotic System. The AquaBeam is an image-guided, surgical robotic system for use in minimally invasive urologic surgery that primarily treats benign prostatic hyperplasia.

Procept gained Food and Drug Administration clearance to launch the AquaBeam in 2017. Business has scaled up quickly, with revenues soaring from $6 million in 2019 to $136 million last year. Analysts expect $214 million in revenues for 2024, which would make for a compelling 57% year-over-year growth rate.

Procept isn’t yet profitable, and that might scare some investors off. However, a proven next-generation surgical system with rapidly scaling revenues should generate a great deal of shareholder value, either for Procept directly, or via an acquisition by a larger medical devices company.

On the date of publication, Ian Bezek held a long position in CMCO stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.

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