One of the major long term trends in the global economy will be increasing automation of industry.
Credit Suisse is out with a detailed analysis of the near and long term implications of the ongoing switchover.
Interestingly, they think one of the principal drivers will be China. With a decreasing supply of low cost rural labor and an effort to push up wages, the country should see an increasing rate of automation.
Right now, their pace of robot adaptation is 8 percent of Japan's, meaning there's a great deal of room to grow.
In the report, Credit Suisse analysts pick their seven favorite stocks in the sector. They think the current macro environment offers an attractive entry point for the long term, and expect industry momentum to ramp up in coming quarters.
Siemens AG
Market Cap: $83.7 billion
Ticker: NYSE: SI
P/E: 10.4x
Siemens is the world leader in factory automation, from which it derives 31 percent of its profits. It has recently announced cost cutting measures and a $3 billion dollar share buyback, and trades at an attractive valuation.
Source: Credit Suisse
Rockwell Automation
Market Cap: $10 billion
Ticker: NYSE: ROK
P/E: 13.5x
FANUC
Market Cap: $30.8 billion
Ticker: TYO: 6954 PINK: FANUY
P/E: 15.7x
FANUC has about a 20 percent global share in the robot market, and is poised to benefit from increased adoption in China and Japan.
One prospect for significant growth would be increasing application of robots to machine tools. Credit Suisse estimates that if one third of new machine tools were outfitted with a single robot, market demand would double.
Source: Credit Suisse
See the rest of the story at Business Insider
Please follow Money Game on Twitter and Facebook.