By: ROBO Global Sales Team
Turbulent markets continue to give investors a run for their money, but cash is still flooding into companies providing robotics and automation solutions. In fact, in 2022 the industry has experienced record-breaking orders globally1. We believe that investors should see the opportunity in this sales growth in automation stocks.
North American companies started the year by purchasing the most workplace robots ever in a single quarter, with 11,595 robots sold at a value of $646 million. According to the Association for Advancing Automation, these Q1 2022 numbers represent growth of 28% more robots and 43% dollar growth over Q1 2021.
It’s fair to assume that sales growth likely will not match this +40% year over year (YOY) rate again anytime soon due to supply constraints and a tight supply chain. But the order backlog that keeps building – in some cases exceeding one year’s worth of sales – could be a nice cushion for robotics manufacturers in the event of a near-term recession. What does all of this mean for tech investors? We think that despite the current bear market, companies all over the world are continuing to prioritize spending on automation and robotics in order to keep up with production and fulfilment demands.
AUTOMATION ORDERS ARE UP
Worldwide installations of industrial robots in the automotive sector reached 109,400 units in 2021 which might not mean much at first glance. But that number represents a 37% YOY growth rate from 20202. Major corporations appear to be taking note of the critical importance of introducing or bettering their factory automation and technology in order to keep up in this post-pandemic world.
The automotive industry isn’t the only area seeing traction for automation, although it is currently the largest. Last year, several non-automotive sectors actually surpassed the growth rates experienced by the automotive industry: “Every industry, including agriculture, construction, retail and hospitality, is now looking at how they can take advantage of robotics to make their companies more successful,” said Alex Shikany, A3’s vice president of membership and business intelligence.
- Metals: up 40%
- Plastics and Rubber: up 29%
- Semiconductors and Electronics/Photonics: up 23%
- Food and Consumer Goods: up 21%
- Life Sciences/Pharma/Biomed: up 14%
- All Other Industries: up 56%
Source: Association for Advancing Automation
A POTENTIAL SILVER LINING FOR TECH INVESTORS: THE LONG HOLD
While the stock market has clearly taken a turn this year, the world of robotics and automation appears to have a bright future. ROBO is currently trading at 21.8x forward price/earnings, 10% below its 8-year historical average of 23.9x.3
Experienced investors should know that a down market isn’t something to dread. In fact, if they’re investing for the long term, it could be something to celebrate. An unfortunate but common mistake when investing in emerging technology is attempting to time the market. Some disruptive securities may seem like overnight successes, but the reality is that ‘big-bang disruptors’ are few and far between. In most cases, the time between invention and mass adoption is difficult to predict. Once a new technology reaches critical mass, however, the market takes notice quickly and acts swiftly.
We’ve seen unpredictable timelines time and time again, highlighting why we believe a long-term buy-and-hold strategy as the optimal—if not the only—prudent way to potentially benefit from the growth curve of emerging technology stocks.
WHY ROBO GLOBAL
Healthcare. Financial Services. Transportation. Manufacturing. Agriculture. Retail. The industries with opportunity for disruption can go on and on. For investors, understanding what’s coming and, even more importantly, how to gain exposure to the companies that are driving this dramatic change, could be an exciting future-focused opportunity.
At ROBO Global, we see disruptive technology as an area where diversification and a longer-term investment horizon can enable investors to harvest this outsized return potential. By taking the time to research the theme and carefully understand the exposure that each of the companies we own provides to our strategies, we believe investors can use disruptive technologies to their advantage. Over time, we believe that owning leaders in robotics and automation can potentially benefit a comprehensive portfolio.
Does today’s market have you wondering where to invest to help bolster your portfolio down the road? The ROBO ETF may be one way for you to get exposure to the ever-changing world of innovative technology. Want to learn more? Email us at firstname.lastname@example.org so we can set up some time to talk.
1 Source: ROBO Global, Association for Advancing Automation, International Federation of Robots
2 Source: Association for Advancing Automation
3 Source: ROBO Global, S&P CapitalIQ. Forward price-to-earnings (forward P/E) is a version of the ratio of price-to-earnings (P/E) that uses forecasted earnings for the P/E calculation (Investopedia). Not a forecast of the fund’s future performance.