While you have seen a multitude of stories about the rise of robots in manufacturing as well as everyday life, you may not be aware of Fanuc (FANUY), a Japanese blue chip with zero debt and a sterling reputation, asserts international expert Carl Delfeld, editor of Cabot Global Stocks Explorer.
Fanuc is the world’s leading manufacturer of computerized numerical control devices that are used in machine tools and also serve as the “brains” of industrial robots. Fanuc claims to be the only company that uses robots to make robots.
Fanuc has been a world leader in robotics since the early 1970s. It was founded as a wholly owned subsidiary of Fujitsu in 1955 after that electronics giant decided to enter the factory automation business.
Today Fanuc is as global as it gets with over 240 joint ventures and offices in over 46 countries with a commanding 65% share of its world market.
Fanuc should benefit from robust demand from developed markets as well as China as its manufacturing wages continue to increase and manufacturers look to robots to increase productivity. You can find Fanuc robots at warehouses at Amazon (AMZN) as well as the shop floor of General Motors (GM).
Use of industrial robots has allowed companies like Panasonic to run factories that produce 2 million plasma television sets a month with just 25 people.
Much of the company’s sales are channeled through GE Fanuc, a 50-50 automated machinery joint venture with General Electric (GE). Fanuc does most of its manufacturing in Japan, and is building a new factory near Tokyo to double its domestic output capacity of machine tools to produce parts of smartphones.
I have been following Fanuc’s stock for some time but it always seemed expensive. With the pullback in the market, now is a great entry point as the stock is trading just over $13, the lowest price in a decade.
Fanuc offers investors a pristine balance sheet with zero debt and a whopping $7 billion in cash. Profit margins are impressive and Fanuc also bought back 72 million shares last month. In short, Fanuc is a high-quality play on what seems to be an unstoppable trend. For now, we recommend buying half of our intended position.
