We recently published a list of 8 Most Promising Robotics Stocks According to Hedge Funds. In this article, we are going to take a look at where RTX Corporation (NYSE:RTX) stands against other most promising robotics stocks according to hedge funds.
The Service Robotics Industry Is on the Move
The robotics industry was once considered to eat human jobs and replace them with machines. However, robotics is not about replacing humans but it’s about improving and automating human tasks to reduce time and improve task efficiency. The AI boom has accelerated the adoption of automation in organizations. Companies, especially after the launch of ChatGPT, have been relying on generative AI services. Now, we are experiencing robotics alongside AI, a revolutionary development. Hospitality, agriculture, professional cleaning, automotive, and medical are some of the biggest industries using robots.
According to the International Federation of Robotics (IFR), the sales of professional service robots soared by 30% in 2023 worldwide. IFR’s statistics department registered over 205,000 robotics units in 2023, with the Asia-Pacific region recording the highest sales in the world. The Asia-Pacific region reported 80% of global robotics sales, accounting for almost 162,284 units.
The transportation and logistics service was among the markets with the highest robotics sales in 2023. The total units built for the application class transportation and logistics was approximately 113,000, up 35% year-over-year. The demand for the robotics industry is due to a shortage of skilled labour, as per the 2024 report by IFR. Elon Musk has been in the news since the launch of his company’s robotaxis. The robotaxis could be a game changer for robotics automation in outdoor environments.
Hospitality robots are another big thing in the robotics industry today. In 2023, more than 54,000 units were sold in the hospitality sector, with mobile guidance, information, and telepresence robots accounting for most of the robotics units. Sales for agricultural robots were 20,000, while cleaning robots reported sales of 12,000 units, up by 21% and 4%, respectively. Professional cleaning robots are mainly being used for floor cleaning, which represents nearly 70% of the total units sold in 2023. Medical remains another growing sector as medical robots soared by 36% to almost 6,100 units. The demand for surgery and diagnostics robots was the highest as they grew by 14% and 25% year-over-year.
The US Robotics Market
The United States remains the leader among the service and medical robot manufacturers. Nearly 199 companies are based out of the US, with 66% of them producing professional service robots, 27% consumer service robots, and 12% medical robots. China follows the US with 107 service and medical robot manufacturers, while Germany ranks third with 83 companies. Earlier this year, Bill Gates pointed out several “cutting-edge robotics startups and labs” that excite him, including three companies focused on developing humanoids. One of them is Agility Robotics which focuses on developing human-centric, multipurpose robots for logistics work.
Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ), Robo Global Robotics and Automation Index ETF (NYSE:ROBO), and First Trust Nasdaq Artificial Intelligence & Robotics ETF (NASDAQ:ROBT) are three of the well-known robotics ETFs. These ETFs have surged more than 37%, 20%, and 19% over the last 1 year, as of November 7. The average return of these ETFs is over 25% in the last 1 year, which is lower than the S&P 500 index returns of over 35% during the same period.
Our Methodology
For this list, we sifted through various ETFs and internet rankings covering robotics stocks to compile an initial list. We then selected the top robotics stocks that were the most popular among hedge funds and had a market capitalization of at least $1 billion, as of November 7. We ranked the top 8 stocks based on the number of hedge fund holders in Q2 2024 as per Insider Monkey’s database. The list is ranked in ascending order of the number of hedge fund holders.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An aerial view of a commercial jetliner in flight, its airframe glinting in the sun.
RTX Corporation (NYSE:RTX)
Number of Hedge Fund Holders: 54
RTX Corporation (NYSE:RTX) is a leading aerospace and defense company that has drone-based missile systems and counter-drone technologies. One of RTX’s military robots is the “Coyote,” a drone used to track and shoot down enemy UAVs. RTX offers a wide range of advanced systems and services for commercial, military, and government customers globally. The company operates its services and products through three businesses, Collins Aerospace, Pratt & Whitney, and Raytheon.
RTX Corporation (NYSE:RTX) remains a major player in the military drone market and also remains a major manufacturer of radars, sensors, and electronic warfare equipment, and has a strong position in the global military drone market.
Lately, RTX Corporation (NYSE:RTX) has won three separate contracts worth $1.5 billion from the US armed forces. The biggest contract is worth $736.6 million, with the order of over 1,100 AIM-9X Sidewinder air-to-air missiles. Whereas, the second order is worth $525.5 million, supplying Evolved Seasparrow air defense guided missiles for the US Navy and its allies. The final order of $254.5 million was received for the maintenance of standard missiles, also used for air defense.
As we can see, RTX is progressing with its new advanced machinery and receiving major orders from the US government. During Q3 2024, RTX Corporation (NYSE:RTX) showed notable operational achievements, including an 8% increase in organic sales. By the end of Q3, RTX had an impressive $2 billion of free cash flow. After strong results in Q3, the company has raised its outlook for the full year 2024 and expects sales between $79.25 billion to $79.75 billion, while the EPS is anticipated to be between $5.50 and $5.58 per share.
Overall, RTX ranks 3rd on our list of most promising robotics stocks according to hedge funds. While we acknowledge the potential of RTX to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.