Stocks to buy

Follow the Money: 3 Stocks to Buy to Ride the Automation Wave

Automation is a trend that’s been ongoing for decades. As companies seek greater productivity, automating undesirable tasks will continue to happen, and AI and machine learning will help us get there. Recently, machine learning mainly involved predictive models classifying data for forecasts, with limited corporate spending. The Nasdaq surged 31% in 2023 due to generative buzz around AI and automation stocks, which lead companies to initiate pilot programs.

Here are three of the best automation stocks that walk the line between AI and automation that investors should consider.

Rockwell Automation (ROK)

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Rockwell Automation (NYSE:ROK) is a robust player in industrial automation, with a 12.02% year-to-date increase in 2023. Its recent earnings report shows a remarkable 457% year-over-year net income increase and 25.8% revenue growth. This makes Rockwell an attractive robotics stock for those pursuing innovation and profits.

The firm’s remarkable global expansion is noteworthy. Q2 2023 witnessed a 25.5% year-over-year growth in Asia Pacific sales, boosting non-North American revenues. Additionally, Q1 2023 revealed a $156 million free cash flow, indicative of a promising growth trend likely to continue.

As we enter the latter part of the year, consider Rockwell’s dominance. A leader in the robotics revolution, it’s a compelling investment choice in automation stocks. Don’t miss out on this promising opportunity.

Honeywell International Inc. (HON)

Honeywell (HON) logo on front of glass building

Source: josefkubes / Shutterstock.com

Honeywell International Inc. (NYSE:HON) is a diversified conglomerate with a strong presence in the aerospace and defense sectors. It’s also a significant player in quantum computing, employing trapped-ion technology similar to IonQ (NYSE:IONQ). Honeywell’s merger with Cambridge Quantum positions it for a comprehensive quantum business.

Moreover, the company has significant potential, particularly in the building technologies sector, with IoT opportunities for future growth. Despite recent slower growth, Honeywell’s expected improvement in revenue growth and earnings in 2023 and 2024 makes it a promising stock to consider.

The company also exhibited $35.4 billion revenue in 2022, a modest 3% year-over-year growth. It offers a prudent option for investors seeking stability, backed by its foray into quantum computing through strategic partnerships, which could boost its financial performance.

Intuitive Surgical (ISRG)

A sign with the Intuitive Surgical logo standing outside of a company office. ISRG stock.

Source: Sundry Photography / Shutterstock.com

Intuitive Surgical (NASDAQ:ISRG) faced pandemic-related setbacks with reduced procedures, particularly in Asia. Despite ongoing challenges, the company is rebounding with a 22% global procedure volume increase in Q2 and a 13% rise in installed Da Vinci systems to 8,402.

In Q2 2023, Baron Health Care Fund (MUTF:BHCFX) highlighted Intuitive Surgical for its strong performance, particularly due to the success of its da Vinci Surgical System. The system saw a 26% increase in procedures, surpassing expectations. The company’s potential for future expansion in robotic surgery remains significant.

Intuitive Surgical’s robust financials, marked by high margins and substantial cash generation, make it a favorable investment. With no long-term debt, the company holds over $8.2 billion in cash and investments. This is equivalent to over 7% of its market cap as of Q3 2021.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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