The stocks of robot makers will likely enjoy sharp gains in the coming years as the United States—along with other major industrial nations—use robots to replace expensive human labor, according to Barron's. Shares of Japan-based Fanuc Corp., Rockwell Automation (ROK), German manufacturer KUKA AG and Japan-based Yaskawa Electric Corp could all encounter notable tailwinds. (See also: Robot ETFs Are Coming of Age.)
Policy's Key Role
Robot use in the United States could potentially push higher in the coming years if President Donald Trump succeeds in establishing certain policies, Barron's reported. If corporate income tax rates, for example, pushed lower, this development could lower the total expenses associated with manufacturing but leave labor costs unchanged. (For related reading, see: 3 Ways Robots Affect the Economy.)
This situation could create strong demand for robots under an administration that has spoken in favor of harnessing technological improvements, according to CNBC. In a recent interview, Commerce Secretary Wilbur Ross stated, "I'm not in favor of trying to hold back technological advance." He emphasized that if the United States does not make use of robots, China, Europe and Vietnam, along with everyone else, will. (For more, see also: 4 Industries that Robots are Revolutionizing.)
Potential Upside for Stocks
Should the U.S. experience a surging demand for robots, companies like Fanuc, the U.S. market leader in industrial robots, could see a notable increase in share prices, Barron's reported. While the company's stock has been doing well, it could surge 20% in the next year. Shares of Yaskawa, Rockwell Automation and Switzerland-based ABB Ltd. (ABB) could all benefit from such industry trends due to their exposure to factory automation and industrial robotics.