Cognex Corporation (CGNX)

Added more Cognex, a leader in vision technology. Will improve when they add more automation.

Good company with steady profits. Would recommend buying. 

Growth outlook looks very strong in 2024 and 2025. Revenue is expected to grow by around 15% in both years while EPS is expected to grow by 44% in 2024 and 38% in 2025. CGNX is firmly recognized as a leader and one of the top companies in machine vision technology and has been operating in the space for a long time now. CGNX is unique because its sector would be industrials since it manufactures machine vision products, but it would also be a part of the broader technology industry due to the nature of products it is selling. 
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They make the eyes on robots used in manufacturing for quality control, with Apple as their #1 customer. But an economic slowdown means less demand for these robots. When rates fall, demand will recover. The dividend grows around 10% annually, but it's tiny. CGNX has little competition. Be patient for this to rebound.

A huge customer, Amazon, pulled back spending which has impacted Cognex, but they are well-positioned in automation.

Don't buy now. CGNX is a leader in machine vision, an amazing technology that enables automation. Automation equipment gets installed only when machine tool orders are rising--that's the problem. Those orders are poor now. CGNX has sort of held its revenues given automation in warehousing and the drug industry, but without any major changes in machine tool orders and in making smartphones, it will be hard to grow revenues. Watch CGNX closely, if a 5G iPhone get made in Sept. 2020, and Apple is a customer of Cognex.

Sold down their position because it ran up over his 3% weighting. Will be affected by slowdown in iPhone sales. Valuations got way too stretched. If it got 15-20% lower, he’d be an aggressive buyer. Nothing wrong with it.

This is one of a small group of companies that do advanced machine vision. This is a very fine company. Its primary public competitor is Keyence Corporation (KYCCF-5) in Japan, which he has shares in. Their business has slowed a bit this year. They do a lot of project work for large customers, like Apple. He expects it to remain range-bound at least for the first half of this year. He doesn’t own the company now out of mindfulness of the cycles in its business. He is looking for opportunities to get into this stock in the future.

They do robotics and logistics, like ensuring quality control on assembly lines. They're starting to get contracts from airports. Hit $72, but now in the $50s per share. Q4 is always tough for them. Take a half a position and watch it. They have over 1,000 outstanding patents.

Fundamentally he likes this company. It is an automation play company within the global market and it is a top-5 company in that space. Apple is about 11% of their sales, so be mindful. It is close to fair value.