Win Big On AI Related Stocks (SEIGY, PTC, TER) In Sept.
After celebrating Labour Day on Mon, 04 Sep 2023, it is back to trading again.
The brief respite is a welcome break, let everyone recharge and drive US market higher again this week. Hee hee.
Looking at all the official reports / data out so far, it does seemed like US economy is cooling down gradually, slower than what the Fed wanted.
Better late than never; considering it was the “overlaxed” Quantitative Easing (QE) that resulted in so much liquidity in the market that the Fed has problem mopping them up when the time calls for it.
I have all along been bias towards Bank stocks.
This is because they are an integral part of a country’s infrastructure.
Looking at KBW Nasdaq Bank Index, bank stocks are still “suffering” from the March 2023 banking debacle.
Until (a) US inflation becomes manageable and (b) much needed financial regulations put in placed I don’t foresee full confidence and trust returning to the Financial sector anytime soon.
This begs the “Million Dollar” question - What & Where To Invest Our Hard-Earned Monies?
With Artificial Intelligence (AI) stocks having galloped to new heights in June 2023, pulling Nasdaq up along the way, throwing money at these mega cap stocks (at least for now) seems inappropriate.
It would be more conducive to re-look at them further down the road when AI adoption becomes more tangible and investible.
Robotics companies are the overlooked nuts & bolts of the AI revolution currently.
It may not be too long before investors discover that along with the AI revolution - all supporting peripherals will become increasingly vital to the complete AI chain.
Following are 3 undervalued robotics AI stocks that offers smart exposure to AI’s real-world impact on manufacturing and automation.
They are
(1) $Siemens AG(SIEGY)$: Industrial automation giant with end-to-end hardware/software stack.
Siemens automation & robotics technologies are critical for factories looking to implement more advanced manufacturing techniques.
For its YTD performance, it bottomed on 17 Mar 2023 at $73.16.
With the latest closing price at $74.22, it is time to really consider this German stock.
Its Q3 2023 quarterly earnings revenue is up +12.5%
Its orders is up +15% YoY.
Siemens has acknowledged demand normalization in China slowed growth in specific product segments.
They foresee current headwind as temporal and their long-term secular tailwinds remain intact.
With Its automation backlog sitting at a healthy €12.5 Billion, providing revenue visibility to any investors.
Trading at just 13-times forward earnings, Siemens looks attractively valued, taking into considerations its (a) leading market share and (b) financial strength.
Analysts have forecasted 14% revenue growth for 2023 and steady margin expansion.
The decent 3% dividend yield is the added “bonus” to an otherwise compelling buy.
(2) $PTC Inc(PTC)$: Disrupting the product lifecycle management software market, while pivoting to a recurring revenue model.
PTC is a pure-play software company with a major footprint in industrial robotics and automation, unlike Siemens that is a balance mix of both hardware & software.
PTC is executing a pivot towards recurring software sales, driving rapid growth with fair amount of success.
For its Q3 2023 quarterly earnings, PTC posted +25% Annual Recurring Revenue (ARR) growth, that came in ahead of Wall Street expectations.
Its recent acquisitions of ServiceMax and Arena will help it to expand and enlarge its presence in adjacent spaces.
Its quarterly earnings’ outlook with a forecast of +13% organic ARR growth is surely something an investor needs to note.
At 34-times forward earnings, PTC isn’t exactly cheap.
However, consensus estimates call for 12% annual revenue growth over the next 3 years, justify the premium valuation, coupled with its ability to generate cash to support its growth investments.
(3) $Teradyne(TER)$: The leader in semiconductor test equipment is poised for rebound as memory market stabilizes and AI chip demand accelerates.
Provides mission-critical technologies to manufacture chips for robotics and AI applications.
In Q2 2023, it has languished amid a downturn in the memory and smartphone markets.
Teradyne posted a better-than-expected Q2 2023 quarterly earnings, driven by strength in the auto and industrial markets.
In the earning’s outlook, Management noted strong demand coming from high-performance computing segments tied to artificial intelligence (AI).
Teradyne’s core semiconductor test franchise remains resilient while facing current macro uncertainty.
Trading at 36-times forward earnings, TER looks fairly priced, taking into considerations Wall Street’s analysts’ expectation of a sharp rebound over the next 3 years, with an estimated +20% sales growth.
What Do I Think?
Honestly apart from Seimens that I am familiar with due to its healthcare gadgets that I use, the other 2 AI Robotics & Automation stocks are “foreign” to me.
Each stock’s market cap is: (a) Siemens - $118.11 Billion, (b) PTC - $17.44 Billion, (c) TER - $16.70 Billion.
The respective stocks’ average trading volume is: (a) Siemens - 141,929 (b) PTC - 785,390, (c) TER - 1,646,501.
If I am required to invest in 1 of 3 stocks, I would select TER.
This is because:
There is still an upside for it to climb back to its 52-week high.
Its trading volume is way above the other 2 stocks. If there is one thing I learnt about the US market is that any stock worth investing must have a healthy trading volume.
Lastly, my small position in $Cohu(COHU)$ a company founded in 1947, that is a global technology leader, supplying test, automation, inspection and metrology products and services to the semiconductor industry.
Such stock will not plunge into an abyss when the market is weak.
More importantly, it stock price will regain its footing quickly when the market rallies.
Do you think AI-related stock is the way to ride the Artificial Intelligence wave too?
Do you think of the 3 stocks, TER will be your selection too?
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Every time I comment on a stock/company it goes down so here I say no comment and good luck to all longs
forecast looks fine, future looks rosy for TER and its shareholders.
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