ABB, Robots and the 4th Industrial Revolution

06/23/2017 2:52 am EST


Gordon Pape

Editor and Publisher, The Income Investor and the Internet Wealth Builder

The world is changing at a rate that most of us cannot comprehend. It's being called the Fourth Industrial Revolution and, like those that have gone before, it is ushering in new technologies, creating new forms of wealth, and costing some people their jobs, asserts Gordon Pape, editor of Internet Wealth Builder.

This new Industrial Revolution is just getting started. It will continue for many years to come, bringing with it both opportunity and disruption. Nothing we do will stop it. Rather, we need to recognize what is taking place and adjust our investment strategies accordingly.

We are looking for companies that are future leaders in the new technologies that will shape the lives of future generations. One of them is ABB Group (ABB), a Swedish-Swiss company based in Zurich.

Surprisingly, most people have never heard of this company. Nevertheless, ABB can trace its history back to the late 19th century, employs 132,000 people worldwide, and is a world leader in robotics, industrial automation, clean energy, and software development.

It is the world's largest builder of electricity grids, a leading maker of electric car infrastructure, and a manufacturer of solar power equipment.

The company continues to grow by acquisition. In April, it bought Bernecker & Rainer (B&R), an Austrian industrial automation company for a price rumored to be about $2 billion. B&R has annual sales of about $600 million.

ABB also recently announced that it is partnering with IBM's Watson Internet of Things to develop new technologies that will help companies improve quality control, reduce downtime, and increase the speed and yield of industrial processes.

Potential investors need to recognize that this is a mature company that will not display the growth characteristics of some new high tech companies. While it may not have the glamour of the Silicon Valley companies, ABB is well positioned for future growth as the Fourth Industrial Revolution takes hold.

The ADS shares pay an annual dividend. The most recent payout was $0.755 per unit in April for a yield of 3%. The trailing 12-months p/e ratio is on the high side at 25.4, with a forward p/e of 18.2. We are adding ABB to our International Stocks recommended list.

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