Buy Alert: 3 Robotics Stocks Nearing Super Attractive Entry Points
Before artificial intelligence (AI) became a household word, there was robotics. And the emergence of AI is only drawing more attention to high-potential robotics investments.
AI stocks have been red hot in 2023, and AI will continue to be one of the hottest sectors for investors for the rest of the decade. However, there is some concern that some air is coming out of the AI bubble. And with lingering concerns about a recession, valuation worries are likely to grow.
That could lead investors to consider some AI-adjacent sectors to invest in. One of those would be robotics. Before AI caught the attention of investors, many companies were developing tools that were increasing business productivity by automating many tasks.
A key growth area in this sector is robotic process automation (RPA) software. According to Polaris Market Research, the global RPA market will grow to $66.08 billion by 2032. That will be a 37.9% compound annual growth rate (CAGR) from the $2.7 billion market it was in 2022.
That’s an opportunity long-term investors can capitalize on. Here are three high-potential robotics investments to consider.
Cognizant Technology Solutions (CTSH)
Cognizant Technology Solutions (NASDAQ:CTSH) is not a pure-play robotics company. But the technology and consulting firm makes this list of high-potential robotics investments because of its Cognizant Automation Center Robots as a Service (RaaS) program.
According to Cognizant, RaaS allows customers to replace any human process that does not require intuition.
On the plus side, Cognizant is a profitable company that continues to have a strong revenue base. However, in 2023, revenue has been down slightly on a year-over-year (YOY) basis. And the company says revenue is expected to decline by 1.2% for the full year.
On the other hand, earnings are expected to grow, and free cash flow is increasing. Yet, CTSH stock is down about 7% from its 52-week high. Add in a forward price-earnings (P/E) ratio of around 15x, and you get a picture of a company that is undervalued relative to its prospects.
UiPath (PATH)
UiPath (NYSE:PATH) has been one of the top-performing stocks of 2023. The company now has a market cap of over $10 billion and is recognized as a leading software company specializing in RPA technology.
The company’s platform is being sought after as businesses look to use robotics and AI to work more efficiently. Specifically, the company specializes in software bots that operate as virtual assistants.
That shows up in the company’s revenue figures which continue to grow on both a sequential and year-over-year (YOY) basis. Significantly, revenue growth in the quarter ending April 30 was 18%. This reversed a trend of declining revenue growth. The company also recently reported a robust dollar-based net retention rate of 122%.
That said, UiPath is not yet profitable, and although it’s supposed to get closer to turning a profit in 2023, it is not expected to achieve that goal for a couple of years.
PTC Inc. (PTC)
One of the best ways to look for high-potential robotics investments is through the companies that are the backbone of robotics. That’s the bullish premise for PTC Inc. (NASDAQ:PTC).
In recommending PTC as one of his “millionaire-maker” robotic stocks, my InvestorPlace colleague Josh Enomoto described the company as offering “the software that undergirds robotics.” That’s an apt description for the company, but why is it an opportunity at this time?
PTC is growing revenue at a single-digit rate. But it’s the company’s potential earnings growth that got my attention. That full-year growth is expected to be around 28%. But analysts only project stock price growth of about 10%. That’s a favorable discrepancy that investors can take advantage of.
A forward P/E ratio of around 47x is a little concerning. But if the company can hit those profit targets, it can justify that valuation. And it’s important to note that institutional investors hold about 91% of PTC stock and have been increasing their buying over the last couple of quarters.
On the date of publication, Chris Markoch did not hold (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.
