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Looking for a Good Robot Stock? Try Japan

Robots aren’t taking over the world the way some had feared, but robotics are a big industry. And you can play the trend with this Japanese robot stock.

Robot Hand Gold Dollar Sign Robot Stock

Before I introduce my favorite robot stock, let me first tell you about one of my favorite television series growing up, “The Jetsons.”

The storyline was to imagine what life would be like a century later, in 2062.

Here we are a bit more than half a century later, and many of the gadgets in the show still seem fanciful—consider the Jetson space car folding neatly into a briefcase, or the pill you could take for dinner.

On the other hand, the Jetsons’ robot maid “Rosie” highlights an area where we seem to be well ahead of the game.

Take Boston-based iRobot’s “Ava,” a 5-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 (IRBT), which was recently trading below pandemic-era lows but surged in the summer, has already sold millions of disc-shaped Roomba vacuum cleaners and has robots that will clean your pool or cut your lawn.

The military is a key player in the growth of robotics and its bomb disposal robots have protected soldiers in Iraq.

The robot market for the health sector also looks promising.

And if you’ve seen an Amazon distribution warehouse of late, you’ve seen thousands of robots moving around like ants filling orders and managing inventory, which certainly supports Amazon’s anticipated buyout (which is under ongoing scrutiny in the EU).

A Japanese Robot Stock

Another player in this market is ABB Ltd (ABBNY), which is a familiar European multinational that manufactures electrification, industrial automation, and robotics and motion products worldwide.

But you may not be aware of Fanuc (FANUY), a Japanese blue-chip stock with zero debt, a sterling reputation, and a storied past.

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 also 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 that electronics giant decided to enter the factory automation business.

Today Fanuc is as global as it gets with more than 240 joint ventures and offices in over 46 countries with a commanding 65% share of the world market. Use of industrial robots has allowed companies like Panasonic to run factories that produce 2 million plasma television sets a month with just 25 people. Finally, Fanuc offers investors a pristine balance sheet with zero debt.

Much of the company’s sales are channeled through GE Fanuc, a 50-50 automated machinery joint venture with General Electric Company (GE).

Fanuc does most of its manufacturing in Japan. Fanuc is building a new factory near Tokyo to double its domestic output capacity of machine tools to produce parts of smartphones.

As for Fanuc’s stock, it’s currently trading near multi-year lows, and with Japanese stocks finally bouncing back after years of backsliding, offers an opportunity to diversify away from the U.S. Its conservative management and penchant for maintaining high margins and quality products makes it a fine core holding.

In short, Fanuc is a high-quality play on what seems to be an unstoppable trend.

To learn more about Cabot Explorer, which follows some of the best international stocks, click here.

Do you own any plays on the robotics industry? Tell us about them in the comments below.


*This post has been updated from an original version, published in 2019.

Carl Delfeld is a member of the Cabot investment team, and chief analyst of Cabot Explorer.