As a true tech-sector insider, I do some consulting for Aitonomi, a European startup working on autonomous delivery vehicles guided by artificial intelligence (AI) technology.
In other words: robots.
And thanks to that personal involvement with (and personal interest in) the robotics field, I pay careful attention to the latest technological advances – as well as the mergers and financing deals that make it all possible.
I do this because I understand that mergers are one way for a startup with promising technologies to get access to the cash, know-how, and other resources needed to grow – not to mention that these deals allow the original investors to reap the benefits of their efforts.
Let’s look at the latest deals. I’ll not only tell you what they mean, but I’ll also show you a great way to cash in on the powerful robotics trend – starting right now.
It’s one of the greatest wealth opportunities I see today…
The Disruption Economy
Telemedicine. Remote office work. Grocery shopping by computer. Meals delivered to your doorstep.
The coronavirus pandemic has accelerated a number of nascent markets – each of them enabled by technology. Digital connections and robotic automation will serve as both facilitators and financial beneficiaries.
Take robotics. Because of COVID-19, there’s been a real push by businesses to keep human hands from touching important work.
Indeed, a new report by MarketsandMarkets research tells us that double to more than $73 billion by the end of the decade. To hit this target, that sector will have to grow by an average of 10.4% a year – more than triple the average growth rate of the U.S. economy in recent years.
Think about some of the uses.
In medicine, robotic systems like the Intuitive Surgical Inc. (NASDAQ: ISRG) da Vinci surgical robot can perform tricky procedures and ablate tumors. In healthcare, bionic prostheses and robotic exoskeletons can help with rehabilitations or overcome injuries and other physical handicaps.
In law enforcement and the military, robots can be sent in to defuse bombs or fight fires.
In industry, robots can replace humans on high-speed production lines or – in the case of Amazon.com Inc. (NASDAQ: AMZN) – operate in warehouses to select items from inventory and pack them into shipping boxes.
The applications of robots are limited only by the imaginations of the designers and engineers who created them.
Big companies and financiers alike see the potential – and are circling over the best opportunities. Thanks to my personal involvement, I was able to identify the key deals as soon as they happened.
Let’s consider a few.
On May 5, Intel Corp. (NASDAQ: INTC) said it spend $900 million to buy Moovit, provider of cloud-based navigation software for driverless cars.
Just two months earlier, self-driving car firm Waymo received funding worth $2.25 billion – a stunning amount for the “first round” of venture capital.
These folks are happy to make these deals because they’re playing the “long game.”
By the end of this decade, the vast majority of the 70 million cars sold each year will be produced mostly by robots. And by that time, nearly all cars will be self-driven.
And that’s just for starters.
There’s a broad transformation – or rather, a broad disruption – under way in the global economy. It’s being powered by innovation.
And robotics/automation is a key element of that wave.
Robots Reporting for Duty
When I talk about the automation wave, I’m including everything from industrial robots to chips to sensors and to the software that runs it all.
The online trade journal the Robot Report says that investors poured roughly $2.7 billion into robotic startups in March. That followed roughly $1.2 billion in funding the month before.
Herein lies the challenge for retail investors: It’s nearly impossible to invest alongside the Intels and the big VCs in the mergers or the private-funding stage, where the potential payoffs are the greatest.
And it’s also difficult to do the “due diligence” required to identify the firms with the greatest prospects – and to avoid the risk of those with shaky finances or tenuous technologies.
You see, there’s another way for you to play this trend – to play the entire sector.
That’s why for investors seeking the long-term wealth that robotics can deliver, I recommend the Robo Global Robotics & Automation ETF (NYSE: ROBO) as a foundational holding.
A Basket of Leaders
The holdings are impressive – with leaders and innovators that include:
- NVIDIA Corp. (NASDAQ: NVDA), maker of high-speed chips known as graphics processors. The firm has optimized these to handle the heavy computing requirements for artificial intelligence. That is a major driver for the field as cars, delivery bots, and those used in automation and industry will need some form of AI to operate autonomously.
- Cognex Corp. (NASDAQ: CGNX), a world leader in machine vision. It also supplies software, vision sensors, and industrial ID readers used in manufacturing automation. These systems are used for guiding assembly robots but also for tracking, sorting, and identifying products. Cognex is a key supplier to Apple Inc. (NASDAQ: AAPL) for its vision systems that can detect product defects, a key part of quality control.
- Novanta Inc. (NASDAQ: NOVT), supplier of platforms used in medical robots, part of a market it says is worth $20 billion. The firm also sells photonics, vision, and precision motion gear that is helping a range of clients in advanced manufacturing and healthcare. Its life-sciences unit makes equipment for use in areas such as DNA sequencing.
- Mazor Robotics Ltd. (NASDAQ: MZOR), a fast-growing maker of robotic guidance systems for spinal surgery. A survey of doctors who have used it say the equipment performs surgeries with 98.3% accuracy. That translated into a 56% reduction in unnecessary follow-up X-rays, a 48% drop in post-surgical complications.
Let me be clear on one thing: ROBO’s 0.95% expense ratio is higher than I generally like to pay. But I am making an exception here because this ETF appears especially well-built to capture the field’s sizzling growth.
And it is greatly beating the broad universe of stocks. Over the past year, the S&P 500 is up roughly 3.2%. By contrast, ROBO has tripled that, rising 10.4% over that same period.
Launched in late November 2013, this relatively young fund still offers plenty of upside. Priced around $43 a share, ROBO trades at a fraction of some of its notable portfolio holdings.
In other words, with this one play, we get the safety of owning a group of stocks along with all that high performance.
Take it from me – an industry insider: It’s a “must own” slice of the tech sector.
But even if you’re not ready to pull the trigger on ROBO, at least put this investment on your “watch list.”
— Michael A. Robinson
Source: Money Morning