Headquartered in the shadow of Mount Fuji, Fanuc (FANUY) is the world’s leading manufacturer of computerized numerical control (CNC) devices that are used in machine tools and also serve as the “brains” of industrial robots, explains Carl Delfeld, editor of Cabot Global Stocks Explorer.
Fanuc — whose name is an acronym for Fuji Automatic Numerical Control — 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.
Fanuc offers investors a pristine balance sheet with zero debt and a whopping $7 billion in cash. Profit margins are impressive.
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. In addition, the Japanese market is in a strong uptrend going into 2021.
Industrial robot manufacturer Shanghai-Fanuc Robotics Co. Ltd. has a plant in Shanghai’s Baoshan district. Fanuc claims to be the only company that uses robots to make robots. Demand for its industrial robots is strong even in emerging markets such as China due to higher labor and manufacturing costs.
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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. Fanuc is building a new factory near Tokyo to double its domestic output capacity of machine tools to produce parts of smartphones.
As for Fanuc’s stock, it’s also in a nice uptrend. With its conservative management, quality balance sheet, and penchant for maintaining high margin and quality products makes it a fine conservative core holding.
