How to Profit from the Robotics Revolution
BY TONY SAGAMI
A new restaurant recently opened in San Francisco, which is nothing new except for the fact you won’t see a single human being there. Apart from the behind-the-scenes cooks who prepare the food, everything is computerized and robotic.
Meal ordering and payment is done over in-store iPads or smartphones; there is no human interaction whatsoever. After your meal is prepared, it appears in glass compartments for pickup—just like in the 1960s cartoon show, The Jetsons.
The Robotics Revolution in China Factories
Eatsa is far from the first business to use automation to replace humans. Consider ATM machines. How frequently do you get out of your car and go inside the bank to see a bank teller? Not often!
Even countries with low wages, like China, are automating at a rapid pace. The New York Times recently wrote this about automation and industrial robots:
Faced with an acute and worsening shortage of blue-collar workers, China is rushing to develop and deploy a wide variety of robots for use in thousands of factories.
Waves of migrant workers from the countryside filled China’s factories for the last three decades and helped make the nation the world’s largest manufacturer.
But many companies now find themselves struggling to hire enough workers. And for the scarce workers they do find, pay has more than quintupled in the last decade to more than $500 a month in coastal provinces.
Chinese businesses and the government are responding by designing and starting to install large numbers of robots, with the goal of keeping factories running and expanding without necessarily causing a drop in overall employment.
Kyodo News quoted an unnamed Japanese auto executive who was stunned at the rapid rise in factory wages in China: “The pace of wage hikes is so fast that we will have no choice but to accelerate factory automation and curb the rise in labor costs by installing robots that will perform tasks currently done by workers.”
The Rise of Robots Across the Globe
Today’s factories are highly automated and use amazing robotic machines to do the work of thousands of men. Industrial robots are now a central part of the global manufacturing industry.
According to the International Federation of Robotics, robotic sales will increase by 12% a year from 2015 to 2017. The Boston Consulting Group estimates that the robotics industry will grow by 9% a year from now until 2025.
How You Can Cash In
Clearly, robotics is big business—and going to get a lot bigger.
What’s the best way to invest in the robotic revolution?
Moog Inc. (MOG-A) is an aerospace/defense company. It makes sensors and haptics, which are used in unmanned aerial drone systems.
Dover Corporation (DOV) makes all kinds of industrial machines, including robotic grippers and components.
iRobot Corporation (IRBT) produces military robots and the Roomba vacuum cleaner.
Raytheon Company (RTN) is a giant aerospace/defense company and produces many types of robots such as drones and vision systems.
ABB Ltd. (ABB) is a Swiss conglomerate and gets roughly 20% of its revenue from producing robots.
Elbit Systems Ltd. (ESLT) is an Israeli defense contractor that produces unmanned aircraft and surveillance systems. It also gets about 20% of its business from robotics.
Adept Technology, Inc. (ADEP) makes robots for manufacturing, food processing, automotive and warehousing applications.
My number one robotic pick, however, is an Asian gem that very few American investors have ever heard of. But boy, is it making a mountain of money!
It manufactures a wide range of robots for the aerospace, automotive, consumer goods, food, metal fabrication, medical, pharmaceutical, solar panel, and many other industries.
It has over 220,000 robots installed around the world, controls 65% of the industrial robotic market, and is the most profitable robotic company in the world.
Warning: in spite of the gigantic potential, you shouldn’t rush out and buy any of the above stocks tomorrow morning. As always, timing is everything.
But make no mistake; there is a mountain of money to be made by investing in robotics.
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Markets rise or fall each day, but when reporting the reasons, the financial media rarely provides investors with a complete picture. Tony Sagami shows you the real story behind the week’s market news in his free publication, Connecting the Dots.