Teradyne (TER) - A Play On A Robotic Future

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Investing in robotics is not a new theme... but the lack of highly profitable plays that are straight up dominating, actually is much harder to come by than one would expect for a trend that is likely the future of what is to come.

Why is that? Well part of the reason is that we tend to forget the kind of robotics that is automating processes (and our jobs away) is actually most prevalent in the form of computer chips & software.

That said, computers aren't cool enough.... so lets talk robotics.

Industrial Robots are what we visualize to be "robots" of today. Leaders of that include a lot of foreign names like ABB or Fanuc. Want a better play? Consider Teradyne (TER). No need to look beyond the chart below:

What makes Teradyne a much better robotics play is the fact that it's essentially in a duopoly in automated semiconductor testing. Basically, all the semiconductors out there on the manufacturing lines need to be tested before put into service. Boring... But what makes Teradyne cool is that its exploring a new vertical found in Industrial collaborative robots - these are the robots that can work alongside human interaction.

Teradyne trades with a market capitalization of $14.64 billion based on the intraday share price of $88.20 as of August 21, 2020. What gives the company its comparative advantage is that it's essentially pouring free cash flow from a primary business it dominates into a new vertical found in these co-bots. That's the Amazon strategy of diverting cash flows into new verticals, and its something to pay attention to.

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Posted Using LeoFinance



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