Have you seen the recent videos of the robots developed by Boston Dynamics – a company just recently acquired by Google?
They are both fascinating and a bit creepy but definitely a picture of coming attractions.
In the futuristic television hit series “The Jetsons” launched in 1962, the goal of the creators was to imagine what life would be like a century later in 2062.
Here we are half a century later. Many of the gadgets in the show still seem fanciful such as the Jetson space car folding neatly into a briefcase and a pill for dinner. The Jetsons robot maid “Rosie” highlights another area where we seem to be well ahead of the game.
Here’s how you might profit from these breakthroughs…
Take Boston-based iRobot’s “Ava”, a 5-foot plus robot with an iPad tablet for a brain and Xbox motion sensors to help it navigate around a kitchen or living room.
iRobot, whose stock has surged on the heels of the Google deal, has already sold millions of disc-shaped Roomba vacuum cleaners, and its bomb disposal robots have protected soldiers in Iraq and Afghanistan. The military is a key player in the growth of robotics.
The Robot Report notes that Recon Robotics received Marine and Army orders for 1,100 of their Scout XT robots ($13.9 million) and iRobot received a Department of Defense order for 105 of their FirstLook robots ($1.5 million).
The health sector also looks promising. In late January, iRobot expanded a partnership with InTouch Health, a small company that enables doctors at computer screens to remotely treat stroke victims and other patients.
Then there was Amazon’s $775 million acquisition of Kiva Systems, a tiny supply-chain robot-maker. Kiva makes self-propelled turtle like robot that, after receiving instructions from the Internet cloud, scrambles around warehouses to retrieve and carry packages to their proper shipping point. Since fulfilling orders reportedly costs Amazon about $3.5 billion a year, Kiva’s technology will hopefully help increase efficiency and lower costs.
And both Amazon and UPS are working on drone delivery of packages to your front steps – probably only 3-4 years from being a reality.
While iRobot is an intriguing, high risk/high reward story worth watching, let’s start with FANUC (FANUC.PK), a Japanese blue chip with zero debt plus a cash stockpile of $7 billion.
Headquartered in the shadow of Mount Fuji, Fanuc is the world’s leading manufacturer of computerized numerical control (CNC) devices that are used in machine tools and also serve as the “brains” of industrial robots.
Fanuc, whose name is an acronym for Fuji Automatic Numerical Control, has been a world leader in robotics since the early 1970s. It was founded as a wholly owned subsidiary of Fujitsu in 1955 after that electronics giant decided to enter the factory automation business. Fanuc offers investors a pristine balance sheet with zero debt and a whopping cash stockpile of $7 billion. Profit margins are eye popping with 42% operation and 27% net profit margins.
Most importantly, looking ahead, I see two trends that will boost Fanuc
First, robust demand from China as its manufacturing wages continue to increase at a 20% annual clip and manufacturers look to robots to increase productivity
Industrial robot manufacturer Shanghai-Fanuc Robotics Co. Ltd. has launched a new plant in Shanghai’s Baoshan district. Fanuc claims to be the only company that uses robots to make robots. The new plant sits on a campus of 37,900 square meters and touts an investment of US$16.8 million.
Second, the sharp weakening Japanese yen will boost Fanuc exports. Much of the company’s sales are channeled through GE Fanuc, a 50-50 automated machinery joint venture with General Electric Company. Fanuc does most of its manufacturing in Japan. In addition, Fanuc plans to build a new factory near Tokyo to double its domestic output capacity of machine tools to produce parts of smart phones by the end of the year.
Fanuc is a high quality play on what seems to be an unstoppable trend, and just one of several value plays I’m watching for our Value Bounce portfolio.
Opportunity awaits,
Carl Delfeld.
