If there’s one thing you can count from Wall Street, its repetitious analysis of big tech news.
Take the Amazon.com Inc. (Nasdaq: AMZN) purchase of Whole Foods Market Inc. (Nasdaq: WFM) for $13.2 billion last week.
[ad#Google Adsense 336×280-IA]A steady, predictable stream of stories quoting analysts about the “death of retail” followed the announcement.
Don’t get me wrong – that’s a big, ongoing story. It’s one I wrote about in the past, as recently as May 23.
What they missed is how this is a boon for technology: mobile commerce, Big Data, machine vision and learning, chips, sensors… and especially robots.
Robots already are all over Amazon’s warehouses and are a big part of its success.
Now they’ll be in Whole Foods’ warehouses, checkout lines, and maybe even a part of making deliveries.
You could buy Amazon – and I recommend you do establish a position if you haven’t yet – but that’ll cost you.
You could buy a robotics stock, but that will only scratch the surface.
Or you could make this one move and get at least double the market’s return…
Automation Is Coming
I was excited when I woke up to news of the Amazon-Whole Foods merger. However, I was focused on the logistics and tech angles that financial analysts evidently forgot.
While Amazon picks up the massive list of gourmet items and devoted shoppers at Whole Foods’ 460 retail outlets, it also acquired access to all those stores’ freezers and storage rooms.
With localized cold storage, Amazon can truly make good on its promise of same-day delivery of not just groceries but also many other goods.
Even better, most of these stores are close to wealthy zip codes. I see these folks as the most likely early adopters of “unmanned” deliveries.
Amazon is already pioneering drone-based deliveries. And small robotic delivery vehicles could be next.
Beyond those are the in-house robotics and automation plays. Under CEO Jeff Bezos, Amazon has pushed these two areas like few companies have.
Robotic handlers and sorters could be a huge boon to the grocery sector, by cutting costs and beefing up the notoriously thin margins. As such, the Amazon deal will be a great case study in the value of the robotics revolution. This is a fertile field to be sure.
Research firm Allied Market Research predicts the global robotics market will grow at an average compound rate of 10% through the end 2020, when the sector will have a value of $82.7 billion.
The firm notes that robots are finding use in a wide range of sectors. Auto assembly takes the top market share, accounting for about 39% of sales growth. Electronics follows with 20%.
Robot Invasion
With so much going on in the global robotics field, tech investors ought to consider the Robo-Stox Global Robotics & Automation ETF (Nasdaq: ROBO).
Holding 91 stocks, the fund covers just about every conceivable robotics and factory automation angle. So, we’re talking everything from 3D printing and chips to drones and massive industrial robots.
There’s some fascinating tech in this ETF. Just take a look at some of its top holdings:
- Cognex Corp. (Nasdaq: CGNX) is 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 and also for tracking, sorting, and identifying products. This is the kind of technology that Amazon will need. For its part, Cognex is already a key supplier to Apple Inc. (Nasdaq: AAPL) for its vision systems that can detect product defects, a key part of quality control. It also produces logistics barcode readers and tracking software.
- iRobot Corp. (NASDAQ: IRBT) is all about automating the home. Founded in 1990, the firm was early to the U.S. robotics revolution. Today, it’s the leader in consumer robots. Its best-known product, the Roomba vacuum cleaner, contains onboard navigation as well as vision for in-home landmarks for improved mapping. It also integrates to a smartphone app. The Braava is used for mopping floors, while the Mirra is an underwater robot used for cleaning pools. It’s designed to climb walls as well as transit a flat surface. iRobot also runs a venture fund that invests in robotics, smart home, and automation startups.
- Autodesk Inc. (NASDAQ: ADSK) pioneered complex software vital to making a wide range of products around the world. The field is known as CAD/CAM (computer aided design/computer aided modeling). The tech itself is complex, but the idea behind it all is very simple – use software to design the product and then to control the machines that make it. Whether it’s a surgical tool, an artificial aorta, a fuel nozzle, or a bike helmet, Autodesk’s CAD/CAM software plays a role in it all.
ROBO launched in late November 2013. To mark the occasion, Nasdaq officials used a robotic arm to ring the closing bell. Nice touch.
Priced at just $35, ROBO trades at a fraction of some of its notable portfolio holdings. And Wall Street is starting to wake up to the value that a balanced robotics play like ROBO represents.
So far this year, ROBO has gained 21.9%. That’s more than double the S&P 500’s 9.5% return during the period.
But remember, this fund is really just getting started… so its best days are yet to come.
I believe this is an ETF that offers patient tech investors some excellent long-term potential – and would make a great foundational play for your portfolio.
— Michael Robinson
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Source: Strategic Tech Investor