12 Best Automation Stocks To Buy According to Hedge Funds

8. Emerson Electric Co. (NYSE:EMR)

No. of Hedge Fund Holders: 38

Emerson Electric Co. (NYSE:EMR) is focused on process automation, processing liquids and materials including oil and gas, mining, and chemicals industries. The company’s large portion of revenue comes from factory automation and hybrid automation services. Emerson Electric has divested its climate control business and acquired automated test and measurement company NI. In addition to that, the company owns 55% of the industrial software company AspenTech and has recently announced that it will acquire the remaining minority stake in AspenTech for an all-cash deal of $7.2 billion.

Emerson’s exposure to automation has increased since the acquisition of NI. Moreover, the company’s core process automation business has notable growth drivers such as LNG, renewables, nuclear, carbon capture, hydrogen, and clean fuels, among other key technologies.

On December 12, Jefferies analyst Saree Boroditsky initiated a Buy rating on EMR shares, setting a price target of $160, which implies an upside of almost 25% from the current price level. Boroditsky points to the company’s portfolio transformation, which will potentially make Emerson an industrial technology leader with prospects for stronger growth and higher margins. The analyst also highlights that the company’s growth will be backed by cost synergies and a continued focus on operational excellence. This should be reflected in the company’s EBITDA margins, growing by 200 basis points through 2027.