Why All Investors Should Have Some Robotics Exposure

From Tony Sagami: I’m showing my age, but one of my favorite TV shows during my youth was Lost in Space. I was particularly fond of the robot, which would regularly shout out warning phrases such as this favorite, “Danger, Will Robinson!”

I’ll admit I also had a huge crush on Judy Robinson, played by Norway-born Marta Kristen. But that’s beside the point.

My point is that robots may have been futuristic science fiction in the 1960s, but they are rapidly becoming a crucial member in global commerce and manufacturing.

In fact, robots are about to take an even more prominent role in our everyday lives. How so?

“With government driving up the cost of labor, it’s driving down the number of jobs. You’re going to see automation not just in airports and grocery stores, but in restaurants.”
-Greg Creed, CEO of Yum Brands

Nineteen states — including California, New York, Washington, Massachusetts and Arizona — have recently raised their minimum wage to as high as $11.50 per hour.

As a result, businesses are replacing human labor with machines to reduce labor costs.

  • Wendy’s says it will install self-serve ordering kiosks in 1,000 of its restaurants by the end of this year.
  • About 50% of Panera Bread’s company-owned stores are already equipped with automated ordering kiosks. And the remaining locations expect to have kiosks in place by the end of the year. McDonald’s is rolling out an army of “Create Your Taste” touchscreen kiosks.

Andy Puzder, CEO of Hardee’s and Carl’s Jr., said that robots are “always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case.”

Indeed, automation — including robots — is going to affect a lot more than just your hamburgers and French fries.

Last week, BlackRock, the largest global investment management firm in the world, announced it will increase its reliance on computers to pick stocks. The firm will combine its traditional analysis with computerized stock selection.

As a result, BlackRock will lay off 40 employees, including some portfolio managers!

The biggest market for robotics is manufacturing. According to the International Federation of Robotics, unit sales of industrial robots grew 15% in 2015, while revenues increased 9% to $11 billion. In just North America alone, robotic sales increased by 14% to $1.8 billion.

But that’s just the tip of the iceberg. Barclays Bank predicts that robotic sales will increase by more than 1,000% between now and 2020 and that the value of that market will hit $82 billion!

So if you’re really serious about keeping up with the robotic industry, you should regularly visit the International Federation of Robotics (IFR); especially during the last month of each quarter (March, June, September, and December) when the IFR releases its President’s Report. Go to https://ifr.org/ifr-press-releases/

How can you invest in robotics? The biggest players include ABB Ltd. (ABB), Fanuc Corp. (FANUY), iRobot Corp. (IRBT), Kawasaki Heavy Industries Ltd. (KWHIY), Rockwell Automation Inc. (ROK), and KUKA AG (KU2.DE).

Fanuc, for example, is the world’s largest maker of industrial robots. And chances are you own a product built by one of its machines. Fanuc robots build cars for Ford and Tesla and even parts of Apple iPhones.

Bottom line: Robotics may be one of the most profitable places to invest your money. And any investor who overlooks this dynamic industry will be sorry.

However, that doesn’t mean you should rush out and invest in them tomorrow morning. As always, timing is everything.

The ROBO Global Robotics and Automation Index ETF (NASDAQ:ROBO) was unchanged in premarket trading Wednesday. Year-to-date, ROBO has gained 11.38%, versus a 5.35% rise in the benchmark S&P 500 index during the same period.

ROBO currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #20 of 54 ETFs in the Technology Equities ETFs category.


This article is brought to you courtesy of Money And Markets.

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