In this article, we discuss 12 best automation stocks to buy now. If you want to see more stocks in this selection, check out 5 Best Automation Stocks To Buy Now.
Top industry trends for automation in 2022 included growth in hyper automation, IT systems becoming largely critical as organizations depend on business process automation to offer digital experiences, and new data storage and compute technologies. Although 2023 will bring a slight dampening of automation growth due to macro headwinds and slow economic growth, companies who are stable and resilient will adapt to the new normal but also strengthen their automation efforts to gain competitive advantage.
Automation is changing multiple industries in addition to industrial and manufacturing. Walmart Inc. (NYSE:WMT), the American retail giant, expects investments in automation to be one of the core factors supporting its future profitability, as per Doug McMillon, Walmart President and CEO. He noted that robotic warehouses where inventory is moved by automated wheeled carts will reduce the need for labor in the warehouses themselves, and also in the stores where the goods are transferred. This will drive costs significantly lower over the long-term.
Some of the best automation stocks to consider include NVIDIA Corporation (NASDAQ:NVDA), Honeywell International Inc. (NASDAQ:HON), and Applied Materials, Inc. (NASDAQ:AMAT).
Our Methodology
We selected the following automation stocks based on positive analyst coverage, strong business fundamentals, and market visibility. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022.
Photo by Andrea De Santis on Unsplash
Best Automation Stocks To Buy Now
12. Siemens Aktiengesellschaft (OTC:SIEGY)
Number of Hedge Fund Holders: 3
Siemens Aktiengesellschaft (OTC:SIEGY) is a German technology company that focuses in the areas of automation and digitalization in Europe, Africa, the Middle East, the Americas, Asia, and Australia. It operates through Digital Industries, Smart Infrastructure, Mobility, Siemens Healthineers, and Siemens Financial Services segments.
On November 17, Siemens Aktiengesellschaft (OTC:SIEGY) reported a FQ4 non-GAAP EPS of €3.59 and a revenue of €20.57 billion, up 17.9% on a year-over-year basis. Siemens Aktiengesellschaft (OTC:SIEGY) said revenues increased across all its industrial businesses, driven by double-digit growth at its digital industries and smart infrastructure divisions. The company also proposed to raise its dividend from €4.00 per share a year earlier to €4.25 per share.
RBC Capital analyst Mark Fielding on November 18 raised the price target on Siemens Aktiengesellschaft (OTC:SIEGY) to EUR 155 from EUR 135 and maintained an Outperform rating on the shares.
According to Insider Monkey’s Q3 data, Ken Fisher’s Fisher Asset Management, Ed Beddow and William Tichy’s Beddow Capital Management, and Frederick Disanto’s Ancora Advisors held stakes in Siemens Aktiengesellschaft (OTC:SIEGY), collectively worth $644 million.
In addition to NVIDIA Corporation (NASDAQ:NVDA), Honeywell International Inc. (NASDAQ:HON), and Applied Materials, Inc. (NASDAQ:AMAT), Siemens Aktiengesellschaft (OTC:SIEGY) is one of the best automation stocks to invest in.
11. Pegasystems Inc. (NASDAQ:PEGA)
Number of Hedge Fund Holders: 23
Pegasystems Inc. (NASDAQ:PEGA) is a Massachusetts-based company that develops, markets, licenses, and supports enterprise software applications in the United States, the United Kingdom, Europe, the Middle East, Africa, and the Asia Pacific. It provides Pega Platform, an application development product for clients, and Pega Infinity, a software platform that unifies customer engagement and digital process automation. Pegasystems Inc. (NASDAQ:PEGA) is one of the best automation stocks to invest in.
On October 27, RBC Capital analyst Rishi Jaluria maintained an Outperform rating on Pegasystems Inc. (NASDAQ:PEGA) but lowered the price target on the shares to $65 from $80 after its Q3 earnings miss. The company’s ACV growth decelerated again, and the setup for FY23 looks a bit challenging given the macro backdrop, the analyst told investors in a research note. However, the analyst added that Pegasystems Inc. (NASDAQ:PEGA)’s cost control efforts are showing signs of success, keeping him “positive on the Rule of 40 target by 2024.”
According to Insider Monkey’s data, 23 hedge funds were long Pegasystems Inc. (NASDAQ:PEGA) at the end of Q3 2022, compared to 29 funds in the earlier quarter. Brian Bares’ Bares Capital Management held the leading position in the company, consisting of 5.5 million shares worth $176.3 million.
Here is what Baron Growth Fund has to say about Pegasystems Inc. (NASDAQ:PEGA) in its Q4 2021 investor letter:
“Our Disruptive Growth investments are pursuing idiosyncratic opportunities across the entirety of the global economy. Software companies like Pegasystems, Inc. are leveraging the power of cloud computing to disrupt traditional on-premise software and manual processes in the insurance and financial services markets. Software-as-a-service functionality allows all companies to benefit from iterative software improvements, declining hardware costs, and labor outsourcing in exchange for a fixed annual fee.”
10. UiPath Inc. (NYSE:PATH)
Number of Hedge Fund Holders: 26
UiPath Inc. (NYSE:PATH) is a New York-based company that provides an end-to-end automation platform offering a range of robotic process automation (RPA) solutions in the United States, Romania, and Japan. On December 2, UiPath Inc. (NYSE:PATH) generated Q3 adjusted earnings of $0.05 per share on revenue of $262.7 million, which grew 19% year-over-year. For fiscal fourth quarter 2023, UiPath Inc. (NYSE:PATH) expects ARR to be in the range of $1.174 billion to $1.176 billion, up from the prior guidance of $1.153 billion to $1.158 billion. Total revenue is expected to range from $277 million to $279 million, versus a consensus of $277.99 million.
On December 2, Truist analyst Terry Tillman maintained a Buy rating on UiPath Inc. (NYSE:PATH) but lowered the price target on the shares to $20 from $25 after the company announced preliminary Q3 results and a cost reduction program. UiPath Inc. (NYSE:PATH)’s early go-to-market transformation work, platform advancements, pricing and packaging innovations, and partnership developments all show positive signs of better sales optimization and annual recurring revenue activity, the analyst told investors in a research note.
According to Insider Monkey’s data, 26 hedge funds were bullish on UiPath Inc. (NYSE:PATH) at the end of September 2022, compared to 24 funds in the prior quarter. Cathie Wood’s ARK Investment Management held the largest stake in the company, with 46 million shares worth $581 million.
Here is what ClearBridge Investments had to say about UiPath Inc. (NYSE:PATH) in its Q3 2022 investor letter:
“Over the last three months, we similarly exited UiPath Inc. (NYSE:PATH) due to a change to our original thesis as we believe a new go-to-market strategy for its automation software could impact near-term execution. While we think process automation is a growing market, in a slowing macro environment single solutions may be more vulnerable than the platform solutions of software providers who can bundle products to meet a wide range of needs. In addition, the company has a material component of sales sourced in Europe where the economy is more vulnerable.”
9. Teradyne, Inc. (NASDAQ:TER)
Number of Hedge Fund Holders: 33
Teradyne, Inc. (NASDAQ:TER) is a Massachusetts-based company that designs, develops, and supports automatic test equipment worldwide. The company operates through Semiconductor Test, System Test, Industrial Automation, and Wireless Test segments. On November 14, Teradyne, Inc. (NASDAQ:TER) declared a $0.11 per share quarterly dividend, in line with previous. The dividend is payable on December 21, to shareholders of record on November 28.
On October 27, DA Davidson analyst Thomas Diffely reiterated a Buy rating on Teradyne, Inc. (NASDAQ:TER) but trimmed the price target on the shares to $105 from $120. The analyst noted that while the company outperformed on Q3 earnings and guided better than anticipated in Q4, the management expects Q1 performance to be “sub-seasonal” amid weak industrial demand and China headwinds. However, he remains bullish on the stock over the medium to long-term.
According to Insider Monkey’s data, 33 hedge funds were bullish on Teradyne, Inc. (NASDAQ:TER) at the end of September 2022, compared to 30 funds in the prior quarter. Alkeon Capital Management is a prominent position holder in the company, with 2.4 million shares worth nearly $184 million.
Here is what Carillon Scout Mid Cap Fund has to say about Teradyne, Inc. (NASDAQ:TER) in its Q1 2022 investor letter:
“Semiconductor test equipment and industrial robot producer Teradyne (NASDAQ:TER) fell after offering lower than expected revenue guidance due to fewer orders from its largest customer. Semiconductor equipment companies as a group underperformed as investors feared a general slowdown in semiconductor demand if the global economy slows.”
8. Rockwell Automation, Inc. (NYSE:ROK)
Number of Hedge Fund Holders: 35
Rockwell Automation, Inc. (NYSE:ROK) is a Wisconsin-based provider of industrial automation and digital transformation solutions in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. The company operates through three segments – Intelligent Devices, Software & Control, and Lifecycle Services. On November 2, Rockwell Automation, Inc. (NYSE:ROK) reported a FQ4 non-GAAP EPS of $3.04 and a revenue of $2.13 billion, topping analysts’ estimates by $0.06 and $10 million, respectively. The company also reported sales growth of 7.5% to 11.5%, and organic sales growth of 9.0% to 13.0%.
On December 9, Citi analyst Andrew Kaplowitz raised the price target on Rockwell Automation, Inc. (NYSE:ROK) to $297 from $265 and kept a Buy rating on the shares. The analyst said megatrends and “still emerging fiscal tailwinds” should help moderate potential downside for industrials in a weak macroeconomic environment.
According to Insider Monkey’s third quarter database, Rockwell Automation, Inc. (NYSE:ROK) was part of 35 hedge fund portfolios, compared to 28 in the prior quarter. Israel Englander’s Millennium Management is the leading position holder in the company, with 953,525 shares worth $205 million.
Harding Loevner made the following comment about Rockwell Automation, Inc. (NYSE:ROK) in its Q3 2022 investor letter:
“Rockwell Automation, Inc. (NYSE:ROK), a Milwaukee-based industrial automation company, struggled early in the year with component shortages that prevented it from clearing its overflowing order books and rising input costs. Uncertainty arising from the COVID-19 lockdowns in China and the war in Ukraine prompted management to warn in May of lower profits for the rest of the year. Behind the frustrations, however, were indications that the business outlook remained strong, as order volume continued to grow following price increases at the end of 2021. In the recent quarter, the company reported stronger results despite ongoing supply chain issues that hindered its ability to fulfill orders. To mitigate the risk of supply disruptions, Rockwell has been accumulating inventory and redesigning certain products. We believe Rockwell will see its revenues expand as its resilience improves and supply shortages recede.”
7. PTC Inc. (NASDAQ:PTC)
Number of Hedge Fund Holders: 39
PTC Inc. (NASDAQ:PTC) is a Massachusetts-based software company which specializes in digital transformation, AR, cloud product development platform that delivers computer-aided design, and product lifecycle management software. In 2015, PTC Inc. (NASDAQ:PTC) acquired Kepware Technologies, a software development company that provides communications connectivity to industrial automation environments. Rockwell Automation made a $1 billion equity investment in PTC Inc. (NASDAQ:PTC), acquiring an 8.4% ownership stake in the company on June 11, 2018. It is one of the best automation stocks to monitor.
On November 18, Mizuho analyst Matthew Broome raised the price target on PTC Inc. (NASDAQ:PTC) to $155 from $135 and maintained a Buy rating on the shares following the Q3 investor day. Positively, early results from the continuous software-as-a-service transition imply a higher uplift than had been originally anticipated, the analyst told investors. PTC Inc. (NASDAQ:PTC) also offered medium-term guidance which seems approximately in line with expectations, said the analyst.
According to Insider Monkey’s data, 39 hedge funds were bullish on PTC Inc. (NASDAQ:PTC) at the end of Q3 2022, compared to 42 funds in the prior quarter. Select Equity Group is the largest position holder in the company, with 3.3 million shares worth $346.6 million.
6. Alteryx, Inc. (NYSE:AYX)
Number of Hedge Fund Holders: 40
Alteryx, Inc. (NYSE:AYX) is a California-based company that operates in the analytic process automation business in the Asia Pacific, Europe, the Middle East, Africa, Latin America, and internationally. The company’s analytics platform allows organizations to advance business outcomes and the productivity of their business analysts, data scientists, citizen data scientists, and data engineers. After posting market-beating Q3 results, Alteryx, Inc. (NYSE:AYX) expects Q4 revenue to be in the range of $276 million to $281 million, representing year-over-year growth of 59% to 62%.
On November 2, Needham analyst Mike Cikos maintained a Buy rating on Alteryx, Inc. (NYSE:AYX) but lowered the price target on the shares to $62 from $80. The company’s Q3 results were “strong” and the management’s preliminary discussion for 2023 growth levers is the number one takeaway from its earnings call, noted the analyst. However, his reduced price target is a reflection of wider market movements and multiple compression, the analyst wrote in a research note.
According to Insider Monkey’s Q3 data, 40 hedge funds were long Alteryx, Inc. (NYSE:AYX), compared to 33 funds in the prior quarter. Brian Bares’ Bares Capital Management is the biggest position holder in the company, with approximately 3 million shares worth $163.8 million.
Like NVIDIA Corporation (NASDAQ:NVDA), Honeywell International Inc. (NASDAQ:HON), and Applied Materials, Inc. (NASDAQ:AMAT), Alteryx, Inc. (NYSE:AYX) is one of the premier automation stocks to monitor.
Here is what Brown Capital Management Small Company Fund said about Alteryx, Inc. (NYSE:AYX) in its Q3 2020 investor letter:
“Alteryx provides comprehensive self-service data-analytics software to data scientists and business analysts for finding and sharing data, preparing and blending it, performing a variety of analysis, sharing insights, and automation, without the need for coding. Alteryx’s software is unique in combining a comprehensive data analytics platform with ease of use, driving dramatic improvements in business productivity and outcomes. We believe Alteryx has a large market opportunity given its ability to help data scientists as well as business analysts who have limited technical capabilities. Alteryx serves a broad base of customers across all verticals and all sizes.
During the second quarter, Alteryx reported slower revenue growth relative to prior periods, and guided down full-year revenue below expectations. The revenue slowdown was partly driven by customers in certain areas that were heavily impacted by COVID-19, like small businesses and companies in the hospitality vertical, that slowed spending on new purchases and expansions. Additionally, the company noted that some customers are taking longer to make purchase decisions, extending sales cycles. These developments led to the underperformance during the third quarter. We believe the revenue slowdown is a short-term phenomenon, and continue to believe Alteryx has a large market opportunity and a long runway for multi-year growth.”
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Disclosure: None. 12 Best Automation Stocks To Buy Now is originally published on Insider Monkey.
