Technology is growing at such a fast pace that it can be overwhelming to keep up with the latest innovations – let alone identify which have the potential to change the world (and make you rich in the process).
So, starting today, we’re launching a brand-new perk exclusively for our Strategic Tech Investor readers called the Future Tech Watchlist.
Every week, we’ll bring you a new company that’s making waves in the tech sector so you can have it on our radar and – even better – get in early on what could be the next Apple Inc. (AAPL) or Microsoft Corp. (MSFT)… And get rich.
We’ve found the perfect pick to share with you today to kick off the series. It’s a company that’s been around since – get this – 1960.
I know what you might be thinking. Companies that have been around for 60-plus years don’t typically scream “next big innovator” that could bring you a huge windfall. And that’s part of what makes this pick so fascinating and filled with potential.
Last year, the company pulled in $3.7 billion in revenue in an emerging $260 billion robotics market.
Its automation tech covers a massive scope of industries – from artificial intelligence (A.I.) to 5G to defense to manufacturing, this company has automated just about everything.
But today, I want to focus on one of the biggest problems it’s helping to solve.
And that’s the fact that every year, corporations shell out $62 billion on workplace injuries.
This company’s cobot technology has the potential to turn that cost on its head by creating a safer workplace and putting that money right back into the bottom line of corporations around the world.
Let me show you why there’s so much upside potential ahead for this veteran tech company in the debut of our Future Tech Watchlist…
The company I’m talking about is Teradyne (TER), and there’s a good chance you may have used a product that was created by one of its cobots at some point without even realizing it.
But before I get to the specialty cobots Teradyne is creating, let me show you what a cobot is and why they’re so essential to the future of tech.
What’s a Cobot?
Cobots, short for collaborative robots, are essentially robots that learn multiple tasks to assist humans. These mechanical assistants can be programmed to do a whole host of functions that they can repeat over and over again.
People can hurt themselves on the job, which costs a business money – and lots of it. We’re talking a combined average of $62 billion a year. But cobots help take the heavy burden off of workers who can easily injure themselves, working alongside them to make the job easier and safer.
We’ve seen this play out over the last several years, when there has been a slow transition to using cobots in tandem with humans in stores. For example, Walmart uses cobots to check inventory. In San Francisco, Lowes has the LoweBot that directs customers to the aisle items are located.
You may not see these workers often, but companies are using these things behind the scenes, even spending the money to have their own cobotics section.
While these mechanical workers may cost more money initially, they are cost-effective in putting more money back into a company’s pocket. Generally, the company sees a return on investing in cobots after just one year with an average price between $30,000 to $70,000.
They offer other benefits as well, since cobots do not require time off, sick leave, and they’re dedicated employees.
From a cost perspective, they’re a win-win for the company and employees.
This sector of the overall robotics market is set to explode over the next decade – climbing from about $980 million in 2020 to between $16.4 billion by 2028, according to a report from Fortune Business Insights.
Now that you have a better understanding of cobots and how they’re currently being used, I want to introduce you to the cobots Teradyne is creating.
How Teradyne Is Cashing in on Cobotics
Teradyne is involved in providing companies with cobots that are involved in the manufacturing stage. This includes product assembling, dispensing, finishing, material handling, quality inspection, and welding.
It has provided cobots to big names like Ford Motor Company, Atria, L’Oreal, Nissan Motor Company, Schneider Electric, and dozens of others. For example, Teradyne provides Ford with cobots that provide welding, quality inspection, and dispensing.
In addition to building cobots for companies, Teradyne is directly involved in testing the companies’ products. Before new technological developments make it into a customer’s hands, Teradyne tests the product to ensure it works, then tries the product before it goes into production. This saves a company time and money while ensuring safety.
Some products that Teradyne tests include automotive, defense and aerospace, artificial intelligence, and 5G.
Teradyne also tests about 50% of the world’s semiconductor chips. The test station verifies that the circuit boards are assembled correctly before getting delivered to customers. Testing in the chip market has grown about 7% to 8% over the past five years, with possible additional growth of 1% to 2% under Teradyne.
When you take a deeper look at the numbers, you’ll see Teradyne has a great return on capital employed, also known as ROCE. ROCE is a financial ratio a company is making well-generating profits from its capital. Capital may not always be money since production machinery, land, and patents could be considered ROCE.
As for Teradyne, the company is reinvesting profits at an increasing rate of return through patents and acquisitions. Teradyne has doubled its ROCE to 38%, which is more than double the semiconductor industry average of 15%.
Teradyne Has Seen Continued Growth Under Strong Leadership
One of the most important signifiers of whether a company can be successful is its leadership – and Teradyne has an impressive team behind it.
After graduating from college, Mark Jagiela joined Teradyne as an engineer and moved his way to becoming CEO and President in early 2016 after decades working as an employee. His early years taught him to listen more, primarily when he worked in Japan, leading a division of much older people than him.
He might be a Teradyne vet, but he has nonetheless brought a lot of enthusiasm and innovation to the company in his years as CEO. And his leadership has made a huge difference.
In 2020, shares of the stock were up around 500% since Jagiela became CEO. The S&P 500 was up about 100% in the same time frame.
Under Jagiela, Teradyne acquired AutoGuide, Mobile Industrial Robots, and Energid. He helped transform the company from a semiconductor company to a robotics company in 2015 as Teradyne bought Universal Robotics, the number one name in cobot tech.
All these moves have paid off for Teradyne in recent years, as the company brought in a stunning $3.7 billion in revenue in 2021, up from $3.1 billion the year prior. And Universal Robots’ sales were up 46% in Q3 compared to a year ago, even with recent supply constraints slowing some industrial automation growth.
This stock is definitely one you should keep an eye on.
Earlier last month, I shared another stock capitalizing on the wireless technology sector that you won’t want to miss. Check it out here.
Cheers and good investing,
Michael A. Robinson