Is Emerson Electric (EMR) the Best Automation Stock to Buy According to Hedge Funds?
We recently published a list of . In this article, we are going to take a look at where Emerson Electric Co. (NYSE:EMR) stands against other best automation stocks to buy according to hedge funds.
The rise of generative AI has skyrocketed automation, while robotics are disrupting industrial automation. On the other hand, supply chain automation has reshaped traditional operations from removing warehousing bottlenecks to inventory management, and demand forecasting. In inventory tracking, advanced warehouse management networks, powered by AI and ML algorithms, assist in optimizing inventory placement, resource allocation, route planning, and more.
Professional service robot sales soared by 30% in 2023, according to the International Federation of Robotics (IFR). IFR's statistics department data shows that over 205,000 robotics units were sold in 2023, with Asia-Pacific accounting for 80% of global robotics sales. Transportation and logistics service robots sales accounted for 113,000 units in 2023, a rise of 35% from 2022. In addition to that, Medical robots are in huge demand, and medical robot sales soared by 36% to nearly 6,100 units in 2023.
Apart from robotics, quantum computing is revolutionizing various industries. Other technologies including virtual reality (VR), augmented reality (AR), big data, data analytics, and 5G technology are key to driving automation across various segments.
Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ) and Robo Global Robotics and Automation Index ETF (NYSE:ROBO) have surged more than 11% and 8.50% over the last year, respectively. Considering the growing demand for automation systems and robotics, automation stocks hold much promise.
We used automation and robotics ETFs along with online rankings to shortlist an initial list of automation stocks. We then selected the 12 automation stocks that were the most widely held by hedge funds. The list is sorted in ascending order of the number of hedge fund holders, as of Q3 2024.
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).
Engineers analyzing a complex network of process control software and systems.
No. of Hedge Fund Holders: 38
Emerson Electric Co. (NYSE:EMR) is focused on process automation, processing liquids and materials including oil and gas, mining, and chemicals industries. The company's large portion of revenue comes from factory automation and hybrid automation services. Emerson Electric (NYSE:EMR) has divested its climate control business and acquired automated test and measurement company NI. In addition to that, the company owns 55% of the industrial software company AspenTech and has recently announced that it will acquire the remaining minority stake in AspenTech for an all-cash deal of $7.2 billion.
Emerson Electric (NYSE:EMR)'s exposure to automation has increased since the acquisition of NI. Moreover, the company's core process automation business has notable growth drivers such as LNG, renewables, nuclear, carbon capture, hydrogen, and clean fuels, among other key technologies.
On December 12, Jefferies analyst Saree Boroditsky initiated a Buy rating on EMR shares, setting a price target of $160, which implies an upside of almost 25% from the current price level. Boroditsky points to the company's portfolio transformation, which will potentially make Emerson an industrial technology leader with prospects for stronger growth and higher margins. The analyst also highlights that the company's growth will be backed by cost synergies and a continued focus on operational excellence. This should be reflected in the company's EBITDA margins, growing by 200 basis points through 2027.
Overall, EMR ranks 8th on our list of best automation stocks to buy according to hedge funds. While we acknowledge the potential of EMR to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than EMR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
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