Robotics and Automation

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>>> Investing in Robotics Through ETFs and Stocks (ROBO, ROK)



By Aaron Levitt

November 1, 2016



http://www.investopedia.com/stock-analysis/013015/



Technology has the ability to upend markets. The sector has been responsible for some of the biggest advancements in human history. As a continuously developing sub-sector, robotics affects various segments of the stock market and business. From self-driving cars and drones to 3D printing and self-walking drilling oil rigs, the robot revolution is on the way.

Rise of the Machines

Industrial robots have been a part of the manufacturing sector for years, assisting humans in building cars and other products. Lately robots have been becoming mainstream at an increasing pace. You’re far more likely to be operated on by a robotic surgery machine or have a small droid vacuuming-up your carpet these days. Robot vacuum manufacturer iRobot Corp.’s (IRBT)


iRobot Corp


IRBT revenues have tripled over the past ten years, while the George Washington University Hospital in Washington, D.C., has performs variations of robotic surgeries for a while now. (For a look back, see: iRobot is Priced to Move.)

Almost every sector of the market — from healthcare to the service industry — is now looking towards robotics as a way to cut down on long-term costs, human error and to improve efficiency. After a record amount of deals and investments in robotics in 2015 and a sudden plunge in the beginning of 2016, the number of investments is on the rise once again, according to the reserach data from CB Insights. The top VCs contributing to the growth of the sector include High-Tech Gruenderfonds, Intel Capital, Eclipse Ventures, Draper Fisher Jurvetson and Lux Capital.

Investing in Robotics & Automation

Given how big the robotics industry is, investors with a longer-term time horizon may want to consider playing the space. Some broad-based tech exchange-traded funds (ETFs) have exposure to robotic names. The Robo-Stox Global Robotics & Automation ETF (ROBO)


Exch Trd Con Tr Shs ROBO Global Robotics and Automation Index

ROBO mimics the ROBO Global Index and is focused specifically on the firms that derive some of their profits from robotics and automation-related products or services.

The ROBO Global US Index spreads its bets (40/60) among “bellwether” and “non-bellwether” robotics firms. It defines “bellwethers” as firms whose primary business focus is robotics and automation. The "non-bellwethers" are firms with part of revenues coming from the sector and that have a potential to grow in the field.

The ROBO ETF was created in 2013 and as of October 31, 2016, has $107 million in net assets and tracks 85 firms. The fund charges 0.95% as a management fee and has an annualized one-year return of 28% according to Robo Global ETFs.

Another top choice for the industrial robotics sector could be Rockwell Automation Inc. (ROK)


Rockwell Automation Inc

ROK is one of the world’s largest companies dedicated to industrial automation and robots. It’s basically the blue chip in the sector and has its hands in almost every industrial sector. That standing has helped the firm see some huge gains on the profit front as well. For the latest quarter ending September 30, 2016, ROK reported earnings per share of $5.89 according to Capital IQ. Those kind of earnings beats have happened with pretty good frequency over the last few quarters excluding the dip in the beginning of 2016. (For related reading, see: How Technology is Replacing Workers.)

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