Investors in the robotics sector need to carefully evaluate their portfolio as several risky robotics stocks are predicted to experience a decline. Companies categorized as overvalued or risky within the robotics industry may warrant consideration for selling. With expected downward trends, assessing these stocks’ financials and market position becomes crucial to make informed investment decisions.
These risky robotics stocks could face challenges due to factors such as inflated valuations or concerns over future growth prospects. Investors usually consider robotics stocks risky. And it makes sense since the industry is still in its infancy, regardless of what Sci-Fi movies tell you.
The projected revenue in the robotics market is set to reach $34.94 billion by 2023, with an anticipated annual growth rate (CAGR 2023-2027) of 5.52%, according to a report from Statista. This growth trajectory indicates a market volume of US$43.32 billion by 2027. Clearly, we are far from seeing the last of this sector.
However, while the robotics industry continues to show promise and potential for future growth, it is essential to identify the specific companies that may face potential declines. By staying informed about the market conditions and closely monitoring individual robotics stocks, investors can navigate the sector’s volatility and make well-informed choices to optimize their investment portfolios.
Meta Platforms (META)
Investors are monitoring Meta Platforms (NASDAQ:META) closely, considering the recent challenges the company is facing. Meta’s revenue growth is slowing down, primarily due to competition from TikTok, a slowdown in ad spending, and the impact of Apple’s ad-tracking changes.
Additionally, the efforts made by Meta to delve into the metaverse have not resulted in significant benefits thus far. Despite spending more than $1 billion monthly on the metaverse, Meta Platforms is not yet reaping the rewards from its venture into this realm. It is unusual to see META stock struggle like this. However, things are not looking great for the first time in a while.
On the flip side, the bulls will argue META will make a comeback because of its diversified model, which includes robotics. Meta Platforms has already unveiled two groundbreaking products, ReSkin and Digit, which can potentially enable artificial intelligence to acquire the ability to ‘feel.’ Moreover, the company’s artificial intelligence research unit is actively developing additional products aimed at imbuing AI with a sense of emotions and sensations.
However, many of these endeavors are in their early stages. And investors are hungry for growth in the current market. Certainly, these investments might bear fruit a few years later. Nevertheless, it is too early to tell at this stage.
HP (NYSE:HPQ) shares are in trouble after the company’s Q2 fiscal 2023 earnings report. Revenue decreased 22% YoY to $12.9 billion, missing estimates by $130 million. Adjusted EPS declined 26% to $0.80 but exceeded expectations by $0.04.
During the pandemic, HP experienced strong growth due to increased demand for PCs for remote work, online classes, and gaming. However, as the pandemic waned, these conditions weakened. While the commercial PC and printing businesses partially offset the slowdown with hardware upgrades, macroeconomic headwinds hampered recovery.
Despite a cyclical slowdown, HP’s stock has already fallen over 20% in the past year. It currently trades at a modest valuation of 8.76 times the forward price to earnings, with a forward dividend yield of 3.4%. Some investors may view HP as a defensive income play amidst the ongoing bear market.
On robotics, HP introduced the SitePrint autonomous robotic solution to automate the construction layout process last year. This innovative robot, resembling an autonomous entity, can print layouts on construction site floors autonomously. The robot can be controlled remotely using a tablet. HP is actively engaged in developing various robotics products, with SitePrint being one of its notable advancements in the field. However, investors are not very excited. Understandably, the focus is on slowing growth, and these products will take time to make a dent.
To navigate market challenges, HP has implemented the Future Ready Transformation Plan, digitizing processes, reducing expenses, streamlining products, and expanding subscriptions in hybrid work, gaming, industrial graphics, and 3D printing. A workforce reduction of 4,000 to 6,000 employees is planned by fiscal 2025. HP will temporarily reduce buybacks to allocate more resources to optimization.
While HP’s low valuation and yield offer some protection, investors may consider other tech companies with low valuations and stronger growth prospects for now.
Dick’s Sporting Goods (DKS)
Dick’s Sporting Goods (NYSE:DKS) has implemented an innovative solution provided by Locus Robotics, deploying robots collaborating with team members rather than simply following them. This strategic integration of LocusBots alongside employees has yielded remarkable benefits for the sporting goods retailer, including enhanced worker satisfaction, increased engagement, improved productivity, and heightened order accuracy.
The success of Dick’s Sporting Goods has not gone unnoticed. Its shares currently trade at a premium compared to its 52-week low of $70.21. This premium valuation reflects the retailer’s exceptional growth, which is a bit unusual in the industry. Notably, operating margins have more than doubled, reaching 16.5% for the fiscal year ending in January 2022, compared to 7.7% in 2021.
While Dick’s Sporting Goods has experienced robust sales in recent years, there is a likelihood of a slowdown ahead. The overall growth in the sporting goods retail sector is generally sluggish due to stiff external competition. Furthermore, the activewear industry is grappling with high inventory levels, potentially necessitating more markdowns than previously anticipated. These markdowns could continue to exert pressure on the retailer’s profit margins.
On the publication date, Faizan Farooque did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.