December 15th, 2015

BANK OF AMERICA: Buy these 11 stocks to profit as e-commerce and robotics revolutionize their businesses and keep them growing faster than peers

Amazon + robotPaul Hennessy/NurPhoto via Getty Images

Summary List Placement

Bank of America says $1 trillion might be up for grabs thanks to the trade war and rapid changes in technology, and it's giving investors a heads up about some of the biggest winners.

One of the most important trends caught up in that seismic shift is industrial automation, the reinvention of factories thanks to the rapid growth in fields like e-commerce and artificial intelligence. Bank of America's analysts say that will determine where a big chunk of the trillion dollars is spent.

"The well-publicized tensions between the US and China, compounded by COVID, are driving a re-think in terms of global supply chains with localization and reshoring the critical drivers," they wrote in a recent note. "This could yield incremental industrial automation spending of >US$110 billion, with >US$140 billion in related and subsequent service business."

A group of the bank's analysts explains that software is also becoming a bigger profit center as companies that sell more are more profitable. The pace of innovation keeps speeding up as well.

"We have already passed the point where industrials spend more money on software than hardware," wrote Andrew Obin, Alexander Virgo, John King, and Kenjin Hotta.

The group says the 11 global companies listed below are going to be some of the biggest beneficiaries of that trend over the next few years. Their top picks are a blend of pure-play industrial software companies and more familiar conglomerates that have figured out how to make these trends work for them.

Broadly, the companies are benefiting from trends like a supply-chain shift away from China, the "smart warehouse" requirements connected to e-commerce growth, evolving industrial software, the growing necessity of Internet of Things capabilities, and the benefits of new developments in robotics.

The companies all have "Buy" ratings from BofA analysts, and they're ranked from lowest to highest based their upside, as calculated from the firm's current price targets.

"We believe these companies all offer investors superior growth dynamics as a result of their exposure or positioning within industrial software markets and Industrial Internet of Things themes," say the bank's analysts.

Read more: 

11. Aveva GroupMarkets Insider

Ticker: LON:AVV

Country: United Kingdom

Price target: 48.50 GBP

Upside to target: 1.2%

Thesis: "We believe there is a further upside to consensus estimates, fueled by end market growth, strong execution and significant synergies with SES. ... In addition, the OSIsoft acquisition is a major catalyst for the stock, delivering faster growth for the company."

Source: Bank of America



10. Kion GroupMarkets Insider

Ticker: KGX.DE

Country: Germany

Price target: 80 EUR

Upside to target: 10.2%

Thesis: "We believe KION will continue to show positive results as they did in Q2... E-commerce markets were expected to grow 14% CAGR to 2027 before COVID; we think COVID accelerates this growth. KION, as the market leader, should benefit strongly from this trend."

Source: Bank of America



9. FanucMarkets Insider

Ticker: JP:6954

Country: Japan

Price target: 22,500 JPY

Upside to target: 12.1%

Thesis: "We expect Fanuc's earnings will bottom in the near term and see potential improvements into 2H FY3/21 and FY3/22. ... We believe the COVID-19 outbreak will accelerate shifting of supply chains and boost factory automation demand, and Fanuc's robotics business is likely to be a key beneficiary of this trend."

Source: Bank of America



8. Altas CopcoMarketwatch

Ticker: ATCOA.SE

Country: Sweden

Price target: SEK475

Upside to target: 13.3%

Thesis: "Atlas Copco is one of the higher 'quality' stocks in EU capital goods space driven by its highly resilient business model and solid cash flow generation even during tough operating environment (such as during COVID-19)."

Source: Bank of America



7. Dassault SystèmesMarkets Insider

Ticker: DSY:EN

Country: France

Price target: 180 EUR

Upside to target: 13.9%

Thesis: "Its pipeline has been firming up in Q2, driven by improvements in the automotive business. Medidata has reported a 'strong' bookings growth ...We see the November analyst day as a potential catalyst and generally believe the company's recovery - aided by Medidata - could be quicker than expectations."

Source: Bank of America



See the rest of the story at Business Insider

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SEE ALSO: Sunil Thakor's global stock fund has returned more than 500% to investors since 2009 by precisely targeting high-growth companies. He explains how he finds long-term winners in a 'sweet spot' that minimizes risk.

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