The 4 Best Automation Stocks to Buy
Automation is one of the most exciting technological frontiers in the world today. This is mainly because of all the different uses that humans have for it. When most people think of automation, they immediately think of robotic arms on an assembly line. While this is definitely one use, it only scratches the surface of how automation can help. In fact, we probably haven’t even discovered all of the use cases yet. This is part of the reason why investors are always hunting for the next best automation stocks to buy.
Oftentimes, automation actually gets cast in a negative light. People associate automation with a dystopian future. In this future, robots control everything and humans have no jobs or purpose. In reality, humans will always have a role to play. As automation increases, humans’ role will simply shift. Instead of screwing in the bolt on the assembly line, they will manage the machine that now screws the bolt. Or they could help design more efficient machines. They could also learn how to market and sell this new technology.
Top Automation Stocks to Invest In
There are so many upsides to automation that it’s a little overwhelming. To start, machines are both more productive and efficient than humans. A machine can work all night, while humans need to rest. Automation can also boost product quality, improve worker safety, and use materials more efficiently. On top of that, automation could even result in shorter workweeks for humans. So what are a few different ways that automation is being used today?
Let’s take a look at the top automation stocks to buy.
NOTE: I’m not a financial advisor and am just offering my own research and commentary. Please do your own due diligence before making any investment decisions.
No. 4 UiPath (NYSE: PATH)
Remember Clippy the Paperclip from Microsoft word? If not, Clippy would “sit” on your open Microsoft Word doc. He (she?) would answer questions, check your spelling, and just help out in general. UiPath’s product is like Clippy on Adderall. The technical term of what UiPath does is software robotics.
There are two major problems with the modern workplace. First, so much of the work that’s done is tedious. Sending emails, inputting data, researching, approving other people’s work, etc. So much of the day-to-day can be incredibly time-consuming. Second, a lot of this work is repetitive. It’s the same day after day across most organizations. UiPath is one of the best automation stocks out there because it addresses both of these issues. UiPath’s software helps companies automate these manual digital tasks. By doing this, it saves companies time, resources, and money.
UiPath’s tech doesn’t replace the worker. Just like Clippy, its program runs alongside employees. It simply helps out with certain tasks that are able to be automated. This allows employees to work more efficiently.
Right now, UiPath is not churning out tons of profit. In Q3 2021, it reported revenue of $220.82 million. In the same quarter, it lost $122.79 million. However, it has shown a strong ability to scale small accounts into much bigger ones. Many clients are starting small with this software. Then, once they see the benefit, they quickly ramp up. Since Q4 2020, UiPath has grown ARR at a 64% CAGR. Right now, a few major clients are Google, NASA and Airbus.
The software automation market was just $17 billion in 2020. However, UiPath expects this to grow to $30 billion by 2024.
UiPath went public in May 2021. Its stock is down 47% since then.
No. 3 iRobot (Nasdaq: IRBT)
You’re probably familiar with iRobot from its flagship product, the Roomba. If not, Roomba (Robot + Vacuum) is a small disk-like robot. It patrols your floors automatically to clean up messes for you. iRobot has expanded its product line since Roomba. It now has 11 products. These products include an automatic mop as well as a robot to help kids learn to code.
iRobot is one of the few consumer-focused automation stocks. It helps consumers automate their household cleaning. Its product started out as a “nice to have”. It was a fun gift for others or a way to treat yourself if you had some money to spare. However, as smart homes start to grow in popularity, Roomba could end up playing a bigger role. This is because of Genius Home Intelligence.
Genius Home Intelligence is a new AI system from iRobot. It helps Roombas and other robots clean more efficiently. It does this by remembering room designs, avoiding obstacles, and learning your schedule. This way, Roomba can clean more efficiently while you are out of the house. Genius Home Intelligence also makes iRobot a contender for one of the top smart home stocks.
In Q3 2021, iRobot reported revenue of $440.68 million. It also reported a net income of $57.22 million. As iRobot tech improves, it’s easy to see Roomba transitioning into a “need to have” in the coming years.
IRobot’s stock was down 20% during 2021. However, it’s up 12% over the past five years.
Automation Stocks No. 2 ZipRecruiter (NYSE: ZIP)
ZipRecruiter is another company you might not expect to find on a list of automation stocks. However, it definitely deals with automation. More specifically, it helps companies automate a critical, yet tedious process. That process is hiring quality employees.
What some people might not appreciate is just how important the hiring process is. A company is only as good as its employees. Bringing in top-tier employees is how most companies transition from good to great. However, hiring top talent is also costly, tedious, and repetitive. ZipRecruiter helps fix this.
ZipRecruiter’s software works more like a matchmaking service. It uses artificial intelligence to automate the hiring process. For instance, many hiring managers receive hundreds, if not thousands, of applications. This is way too many for any one person to thoughtfully review. ZipRecruiter tech helps filter through the volume. This helps managers find candidates that are the best fit. Through the use of AI, ZipRecruiter’s tech is also constantly improving. It can learn from the past to offer better recommendations in the future.
It was founded in 2010. Since then, it has helped over 2.8 million businesses and 110 million employees.
ZipRecruiter just went public in May 2021. Due to this, there is limited financial data about its business. However, it reported strong revenue growth through 3 quarters of 2021. It reported 2021 quarterly revenues of $125.37 million, $182.96 million, $212.67 million. These numbers were up 10.66%, 108.73% and 106.78% respectively year-over-year (YOY).
Since going public in 2021, ZipRecruiter stock is up 13%.
Best Automation Stocks: No. 1 Teradyne (Nasdaq: TER)
Finally, we have arrived at robotic arms. When you think of automation stocks, Teradyne is probably the company that comes to mind. The official definition for this type of business is industrial automation. Although, keep in mind that this is just one division of Teradyne. It has many other business lines.
As far as this division goes, it has 4 subsidiaries. These subsidiaries are Universal Robots, Mobile Industrial Robots, AutoGuide Mobile Robots and Energid. Each brand operates as an independent business unit. When it comes to robotic automation, Teradyne offers three main categories.
First, it builds collaborative robots. These are robotic arms that work alongside humans. Imagine robotic arms helping to build a car at a Ford plant.
Teradyne also builds autonomous mobile robots. These are robots that roam warehouses and help move materials. Imagine something similar to the robots in an Amazon warehouse. Two of the leaders in this space are Mobile Industrial Robots (MiR) and AutoGuide. Both are subsidiaries of Teradyne.
Finally, Teradyne offers motion control software for robots. This is software that makes programming robots much easier. It allows managers to reprogram the same robot to perform different tasks.
Out of all the automation stocks on this list, Teradyne is by far the most established. Its profits have increased every year since 2017. In 2020, it reported annual revenue of $3.12 billion. It also posted a net income of $784.15 million. These numbers were up 36% and 67% respectively YOY.
Teradyne’s stock was up 20% in 2021. It is also up 496% over the past five years.
I hope that you’ve found this article valuable when it comes to finding a few of the best automation stocks to buy. Please base all investment decisions on your own due diligence and risk tolerance.
About Teddy Stavetski
A University of Miami grad, Teddy studied marketing and finance while also playing four years on the football team. He’s always had a passion for business and used his experience from a few personal projects to become one of the top-rated business writers on Fiverr.com. When he’s not hammering words onto paper, you can find him hammering notes on the piano or traveling to some place random.