14 Best Automation Stocks To Buy Now

Published on December 18, 2023 at 5:15 am by Usman Kabir in Hedge Funds, News

In this article, we discuss the 14 best automation stocks to buy now. If you want to skip our detailed analysis of these stocks, go directly to 5 Best Automation Stocks To Buy Now.

Automation is a trend that has been sweeping across the business world for the past few decades, making headlines every now and then but struggling to establish a firm foothold. The pace of change in this regard has accelerated since the pandemic as factors like technological disruptions, labor shortages, and activist investors keen to reduce carbon footprints. According to a report by consulting firm McKinsey, the Internet-of-Things (IoT) market is an indicator of this change with an 18% growth rate for the coming years.

Automation in the business universe is often confused with industrial automation. In the tech-focused society we live in now, automation has moved beyond the industrial and manufacturing sectors, transforming sectors like retail, finance, and even banking. Industrial automation, however, remains one of the biggest drivers of automation growth. According to a study by market research firm Fortune Business Insights, the industrial automation market will reach close to $400 billion in value by the end of this decade, up from $191 billion in 2021.

One example of the importance of automation to the overall health of the economy is the events of the COVID-19 pandemic. The industrial automation initiatives of big companies like Intuitive Surgical, Inc. (NASDAQ:ISRG), Honeywell International Inc. (NASDAQ:HON), and Emerson Electric Co. (NYSE:EMR) helped mitigate the impact of lockdowns. This was done by fast tracking the development and production of vaccines through the Fast Track Automation developed by Honeywell International Inc. (NASDAQ:HON).

Other automation firms also stepped up. In April 2020, ABB Ltd (NYSE:ABB) said it would give free access to the Software-as-a-Service applications it had developed to help vaccine manufacturers. Moving forward beyond 2023, the growth of artificial intelligence and digitization are expected to be key indicators of the overall growth of automation. Cloud-based product digitization, like the one offered by Rockwell Automation, Inc. (NYSE:ROK), integrating AI with raw materials and the end product – effectively the whole supply chain – are one example of this.

The field of robotics, also often confused with automation as a whole, has been taking major strides as well. Gary Guthart, the CEO of Intuitive Surgical, Inc. (NASDAQ:ISRG), recently highlighted during the third quarter earnings call that SimNow, a surgical simulator that allows onboarding and credentialing, as well as learning new procedures, had made remarkable progress as a subscription service. Intuitive Surgical, Inc. (NASDAQ:ISRG) has been delivering robot-assisted surgery services for close to three decades.

“We’re focused on extending our ecosystem internationally and driving our product costs down, particularly for our newer platforms. We are dogged in pursuit of significant long-term opportunity to improve the Quadruple Aim using our integrated ecosystem powered by analytics, and we are pacing our investments to catalyze that opportunity. I’ll now turn the time over to Jamie who will take you through our finances in greater detail.”

Aerial view of automated industrial machines at a modern factory floor, showcasing the company’s innovative machinery.

Our Methodology

The companies that have interests in the automation business were selected for the list and ranked according to hedge fund sentiment. In order to provide readers with some context for their investment choices, the analyst ratings for the stocks are also discussed. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2023 was used to identify the number of hedge funds that hold stakes in each firm.

Best Automation Stocks To Buy Now

14. ABB Ltd (NYSE:ABB)

Number of Hedge Fund Holders: 3

ABB Ltd (NYSE:ABB) manufactures and sells electrification, automation, robotics, and motion products. On December 11, Citi analyst Martin Wilkie upgraded ABB Ltd (NYSE:ABB) stock to Buy from Neutral and raised the price target to CHF 42 from CHF 34, noting the new organic sales growth targets of the firm were a result of accelerating trends in end markets from electrification to automation.

Among the hedge funds being tracked by Insider Monkey, Texas-based investment firm Fisher Asset Management is a leading shareholder in ABB Ltd (NYSE:ABB) with 18 million shares worth more than $678 million.

Just like Intuitive Surgical, Inc. (NASDAQ:ISRG), Honeywell International Inc. (NASDAQ:HON), and Emerson Electric Co. (NYSE:EMR), ABB Ltd (NYSE:ABB) is one of the best automation stocks to buy now.

13. Novanta Inc. (NASDAQ:NOVT)

Number of Hedge Fund Holders: 14

Novanta Inc. (NASDAQ:NOVT) provides electronic equipment and instruments to original equipment manufacturers. On November 20, investment advisory Baird maintained a Neutral rating on Novanta Inc. (NASDAQ:NOVT) stock and lowered the price target to $150 from $169, noting the firm was preparing a strong new product intro cycle in the coming months.

At the end of the third quarter of 2023, 14 hedge funds in the database of Insider Monkey held stakes worth $38 million in Novanta Inc. (NASDAQ:NOVT), compared to 13 the preceding quarter worth $46 million.

In its Q3 2023 investor letter, Conestoga Capital Advisors, an asset management firm, highlighted a few stocks and Novanta Inc. (NASDAQ:NOVT) was one of them. Here is what the fund said:

“Novanta Inc. (NASDAQ:NOVT): After being a leader in two of the prior three quarters, NOVT pulled back during the third quarter. NOVT, a photonics and vision technology company, reported better-than-expected second quarter results but slightly decreased full-year guidance due to a significant decline in their Chinese business, which makes up about 9% of revenue. We visited NOVT headquarters during the quarter and we share management’s optimism around the company’s fundamentals looking forward.”

12. Pegasystems Inc. (NASDAQ:PEGA)

Number of Hedge Fund Holders: 16

Pegasystems Inc. (NASDAQ:PEGA) develops, markets, licenses, hosts, and supports enterprise automation software applications. On October 27, investment advisory Macquarie maintained a Neutral rating on Pegasystems Inc. (NASDAQ:PEGA) stock and lowered the price target to $45 from $50, noting the firm posted a solid third quarter earnings beat.

At the end of the third quarter of 2023, 16 hedge funds in the database of Insider Monkey held stakes worth 631 million in Pegasystems Inc. (NASDAQ:PEGA), compared to 17 the preceding quarter worth $653 million.

11. Ambarella, Inc. (NASDAQ:AMBA)

Number of Hedge Fund Holders: 19

Ambarella, Inc. (NASDAQ:AMBA) develops semiconductor solutions for video that enable high-definition (HD) and ultra HD compression, image processing, and deep neural network processing worldwide. On December 1, investment advisory Susquehanna maintained a Positive rating on Ambarella, Inc. (NASDAQ:AMBA) stock and raised the price target to $70 from $60, noting the firm posted slightly better results and guidance as inventory and demand dynamics appeared to have hit the bottom and may finally be beginning to improve.

At the end of the third quarter of 2023, 19 hedge funds in the database of Insider Monkey held stakes worth $232 million in Ambarella, Inc. (NASDAQ:AMBA), compared to 23 in the preceding quarter worth $324 million.

In its Q3 2022 investor letter, Meridian Funds, an asset management firm, highlighted a few stocks and Ambarella, Inc. (NASDAQ:AMBA) was one of them. Here is what the fund said:

“Ambarella, Inc. (NASDAQ:AMBA) designs system-on-a-chip semiconductor solutions that specialize in visual processing for the security, industrial, and automotive markets. We have owned Ambarella since the third quarter of 2017 when earnings declined due to sales shortfalls at large customer GoPro. Our thesis was that emerging artificial intelligence (AI), automotive, industrial, and security markets would soon dwarf the company’s declining consumer market. After significant outperformance in 2021driven by strong demand for AI-enabled computer vision chips in a variety of applications, Ambarella’s stock has been weak since2022 and was again this quarter. Ambarella’s legacy products, mainly image processors for low-end security cameras, are in decline while the company re-focuses its resources on its computer vision chips, which are enabled for AI processing. The company has a core competency in placing very complicated algorithms on individual chips in a very power-efficient way, placing Ambarella in a strong leadership position as AI capabilities shift from centralized data centers to inference at the edge, a fast-growing future market. We also believe that the company’s superior technology makes it a highly attractive acquisition target for many larger technology companies. As such, the stock remains in the portfolio, though we reduced the position during the quarter as we believe an earnings growth catalyst may be several quarters in the future.”

10. iRobot Corporation (NASDAQ:IRBT)

Number of Hedge Fund Holders: 20

iRobot Corporation (NASDAQ:IRBT) makes and sells different kinds of robots across the world. The European Union has recently raised objections over a proposed iRobot Corporation (NASDAQ:IRBT) purchase by Amazon for $1.4 billion, noting that the deal would restrict competition in the market for robot vacuum cleaners.

Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm Alpine Associates is a leading shareholder in iRobot Corporation (NASDAQ:IRBT) with 962,339 shares worth more than $36 million.

9. Omnicell, Inc. (NASDAQ:OMCL)

Number of Hedge Fund Holders: 20

Omnicell, Inc. (NASDAQ:OMCL) provides automation solutions for the health industry. On November 3, investment advisory Bank of America maintained a Buy rating on Omnicell, Inc. (NASDAQ:OMCL) stock and lowered the price target to $49 from $61, noting the downside risk was more fully reflected in the current share price.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm D E Shaw is a leading shareholder in Omnicell, Inc. (NASDAQ:OMCL) with 492,670 shares worth more than $22 million.

In its Q3 2023 investor letter, Conestoga Capital Advisors, an asset management firm, highlighted a few stocks and Omnicell, Inc. (NASDAQ:OMCL) was one of them. Here is what the fund said:

“Omnicell, Inc. (NASDAQ:OMCL): OMCL is a provider of medication control solutions and medication adherence packaging. The company is facing short-term challenges in the form of hospital spending freezes but we believe the more significant, longer-term concern centers around the business transformation that is underway. Management’s goal of creating a more recurring revenue stream remains in its early stages, and we believe the imbalance between decreasing hardware revenue (medication cabinets) and a ramp in recurring Advanced Services revenue (software) may create a multi-year drag on sales growth and margin expansion. The proceeds of the sale were invested in more attractive companies within the portfolio.”

8. UiPath Inc. (NYSE:PATH)

Number of Hedge Fund Holders: 30

UiPath Inc. (NYSE:PATH) provides an end-to-end automation platform that offers a range of robotic process automation (RPA) solutions primarily in the United States, Romania, and Japan. On December 4, Canaccord analyst Kingsley Crane maintained a Buy rating on UiPath Inc. (NYSE:PATH) stock and raised the price target to $24 from $21, noting the firm posted upbeat third quarter results with steadily improving profit performance.

Among the hedge funds being tracked by Insider Monkey, St. Petersburg, Florida-based investment firm ARK Investment Management is a leading shareholder in UiPath Inc. (NYSE:PATH) with 47 million shares worth more than $809 million.

7. Rockwell Automation, Inc. (NYSE:ROK)

Number of Hedge Fund Holders: 34

Rockwell Automation, Inc. (NYSE:ROK) provides industrial automation and digital transformation solutions. On November 10, investment advisory Bank of America maintained a Neutral rating on Rockwell Automation, Inc. (NYSE:ROK) stock and lowered the price target to $280 from $335, noting that although the firm expects growth to accelerate in the coming months, near-term visibility remains pressured.

At the end of the third quarter of 2023, 34 hedge funds in the database of Insider Monkey held stakes worth $644 million in Rockwell Automation, Inc. (NYSE:ROK), up from 32 the preceding quarter worth $481 million.

6. PTC Inc. (NASDAQ:PTC)

Number of Hedge Fund Holders: 38

PTC Inc. (NASDAQ:PTC) operates as an application software firm. On December 15, investment advisory Mizuho maintained a Buy rating on PTC Inc. (NASDAQ:PTC) stock and raised the price target to $200 from $170, noting the target increase was a reflection of higher comp multiples.

At the end of the third quarter of 2023, 38 hedge funds in the database of Insider Monkey held stakes worth $2.2 billion in PTC Inc. (NASDAQ:PTC), compared to 40 the preceding quarter worth $2.1 billion.

Along with Intuitive Surgical, Inc. (NASDAQ:ISRG), Honeywell International Inc. (NASDAQ:HON), and Emerson Electric Co. (NYSE:EMR), PTC Inc. (NASDAQ:PTC) is one of the best automation stocks to buy now.

Click to continue reading and see 5 Best Automation Stocks To Buy Now.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on October 30, 2024 at by Inan Dogan, PhD

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A New Dawn is Coming to U.S. Stocks

Published on November 16, 2024 at by Insider Monkey Staff

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Click to continue reading…

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