I have long advocated a simple solution to the Republican Party’s demographic problem: register all robots as Republicans.
The Republican governor of Michigan seemed to be following my advice as he walked across the Mackinac Bridge this weekend with a robot as well as thousands of other human constituents.
After all, iRobot (NASDAQ: IRBT) has delivered millions of robots since its inception, as opposed to the only three robots running around when Jimmy Carter was in the White House.
But not all robots are created equal. Have you seen the recent videos of the robots developed by Boston Dynamics, a company recently acquired by Google? They are a bit creepy and could scare off support.
Not so of Boston-based iRobot’s “Ava,” a five-foot plus robot with an iPad tablet for a brain and Xbox motion sensors to help it navigate around a kitchen or living room.
iRobot, whose stock surged on the heels of the Google deal, has already sold millions of disc-shaped Roomba vacuum cleaners, and its bomb disposal robots have protected soldiers in Iraq and Afghanistan. The military is a key player in the growth of robotics.
The health sector also looks promising. In late January, iRobot expanded a partnership with InTouch Health, a small company that enables doctors at computer screens to remotely treat stroke victims and other patients.
Then there was Amazon’s $775 million acquisition of Kiva Systems, a tiny supply-chain robot-maker. Kiva makes a self-propelled turtle-like robot that, after receiving instructions from the cloud, scrambles around warehouses to retrieve and carry packages to their proper shipping points.
Since fulfilling orders reportedly costs Amazon about $3.5 billion a year, Kiva’s technology will hopefully help increase efficiency and lower costs.
And both Amazon and UPS are working on drone delivery of packages to your front steps — probably only three to four years from becoming a reality.
Instead of iRobot
iRobot stock is off 25% since early July, probably based on rumors that Dyson’s “Project N223” will make its Roomba vacuum product obsolete.
So while iRobot is an intriguing, high-risk/high-reward story worth watching, let’s turn our focus to FANUC (OTC: FANUY), a Japanese blue chip with zero debt and a cash stockpile of $7 billion.
Headquartered in the shadow of Mount Fuji, FANUC is the world’s leading manufacturer of computerized numerical control (CNC) devices that are used in machine tools and serve as the “brains” of industrial robots.
FANUC, whose name is an acronym for Fuji Automatic Numerical Control, has been a world leader in robotics since the early 1970s. It was founded as a wholly owned subsidiary of Fujitsu in 1955 after the electronics giant decided to enter the factory automation business.
FANUC offers investors a pristine balance sheet with zero debt and a whopping cash stockpile of $7 billion. Profit margins are eye-popping, with 42% operation and 27% net profit margins.
Most importantly, looking ahead, I see two trends that will boost FANUC…
First, robust demand from China will push it ahead, as the nation’s manufacturing wages continue to increase at a 20% annual clip and manufacturers look to robots to increase productivity.
Industrial robot manufacturer Shanghai-Fanuc Robotics Co. Ltd. has launched a new plant in Shanghai’s Baoshan District. It sits on a campus of 37,900 square meters and touts an investment of $16.8 million. FANUC claims to be the only company that uses robots to make robots.
Second, the sharply weakening Japanese yen will boost FANUC exports. After all, the company does most of its manufacturing in Japan.
In addition, FANUC plans to build a new factory near Tokyo to double its domestic output capacity of machine tools to produce smartphone parts by the end of the year.
Robots are on the march. Look at FANUC as a high-quality play on what seems to be an unstoppable trend.
Until next time,
Carl Delfeld for Wealth Daily
