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Discover the Top 3 Automation Stocks Reshaping Manufacturing and Why You Should Invest Now

Hannah Perry | November 11, 2024

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Automating the Future: Three Top Stocks to Watch in Manufacturing

Today’s economy is reshaped by automation, a game-changer that drives productivity, efficiency, and quality. As businesses grapple with economic challenges, AI-driven solutions—like autonomous robots and machine learning technologies—are stepping up. They’re revitalizing processes, cutting costs, and reshaping the manufacturing landscape. For savvy investors ready to capitalize on this burgeoning trend, look no further than three automation stocks that are leading the charge: Intuitive Surgical, Inc. (ISRG), Honeywell International Inc. (HON), and Rockwell Automation, Inc. (ROK).

The Rise of Automation in Manufacturing

Automation’s transformative influence spans healthcare, aerospace, and manufacturing. Innovations in building systems, sustainable energy, and digital solutions are surfacing as essential components in tackling labor shortages. These advancements not only alleviate our reliance on a dwindling workforce but also enable employees to engage in higher-skilled roles. This positions automation as a smart investment opportunity—now and for years to come.

The global automation-as-a-service market, with a current valuation of $2.04 billion, is projected to soar to $13.45 billion by 2034, boasting an impressive 20.75% CAGR. This growth emphasizes innovations aimed at enhancing patient experiences, reducing costs, and providing accurate diagnoses in healthcare, as well as advancements in industrial robotics that elevate efficiency and improve worker safety. With the Industry 4.0 automation revolution underway, manufacturing gains in efficiency, productivity, and optimized supply chains are on the horizon.

Spotlight on Automation Stocks

1. Intuitive Surgical, Inc. (ISRG)

Intuitive Surgical develops cutting-edge products that empower healthcare providers to deliver minimally invasive care worldwide. Their flagship product, the da Vinci Surgical System, is a key contributor to their success. The numbers tell an impressive story:

  • Trailing-12-month levered FCF margin of 8.10%, a staggering 277.3% above the industry average.
  • Trailing-12-month Capex/Sales at 15.69%, eclipsing the industry benchmark by 386.5%.
  • EBIT margin at 26.24%, significantly exceeding the average of 2.29%.

In Q3 2024, total revenues rose by 17% YoY to $2.04 billion, with non-GAAP net income swelling an impressive 27.7% YoY. Analysts estimate EPS of $1.75 for Q4, up 9.5%. The stock has soared 88.1% over the past year, closing at $524.28. With an overall A rating for Sentiment, ISRG is a must-watch.

2. Honeywell International Inc. (HON)

Honeywell’s expansive portfolio includes aerospace technologies, building automation, and sustainable energy solutions. Here’s why it’s on our radar:

  • Trailing-12-month EBIT margin stands at 20.89%, a remarkable 104.3% above the industry average.
  • Return on Total Assets is up at 7.73%, beating the average by 46.9%.
  • Free cash flow reached $1.72 billion, growing 10.1% YoY.

In Q3 2024, net sales climbed 8.5% YoY to $9.73 billion, and adjusted EPS improved 8.4%. Expected growth continues, with Q4 forecasts of $2.78 EPS and $10.24 billion in revenue. With a B-grade rating, it holds a solid position at $217.50, up 16.6% over the past year.

3. Rockwell Automation, Inc. (ROK)

ROK is pivotal in digital transformation solutions across diverse markets. Here are key highlights:

  • Gross profit margin at 39.83%, surpassing the industry average by 25.5%.
  • Trailing-12-month EBITDA margin at 20.40%, topping the average by 46.4%.
  • Total sales for Q3 reached $2.04 billion, with gross profit at $770.6 million.

The recent rollout of the FactoryTalk DataMosaix App Builder and further enhancements in their software offerings underscore ROK’s dedication to boosting operational efficiency. With analyst expectations of a 2.9% increase in EPS and 4.7% in revenue, this stock has gained 11.2% recently, closing at $277.09. It’s rated B for Momentum, making it a compelling option in these dynamic times.

Conclusion

As the manufacturing landscape evolves with automation at the helm, these three stocks stand out for their strong fundamentals and growth potential. Keep a close watch on ISRG, HON, and ROK as you navigate this transformative market. Don’t let this opportunity pass you by—stay ahead of the trends and make your trading moves now!