Ross Healy Rockwell Automation Inc. ROK-N Unspecified Apr 17, 2023

Global supply chain disruption has made American companies invest more in domestic production, which helps automation companies like ROK. Automation helps American companies compete with cheap overseas labour. ROK had a great quarter yesterday with 27% organic growth and raised full-year forecast. Down 20% from 2021 highs, so there's room to run.

It has lagged but is in a good trend. You could buy above $300 or at $270. Whether you wait to buy depends on whether you are a long term investor. Industrials are doing better.

Highest quality company in industrial automation. AI will bring a whole plethora of opportunities. Great companies hit new highs and then go higher. You're just fine holding.

ROK operates as a provider of industrial automation solutions and is now trading at 24x times' Forward P/E. In the 2Q, ROK’s revenue grew 13.7% to $2.24B, missing estimates of $2.34B and EPS was $3.01 missing estimates of $3.19. Although the result was a miss for both the top and bottom lines, the company also updated a better outlook of double-digit growth (around 15%) for FY2023. The balance sheet is strong, with net debt of $3.6B and net debt/EBITDA is 1.9x. In the last five years, the company consistently grew its topline in the range of single-digit(except in 2020 due to the pandemic), gradually raising dividends and share repurchases over the years, which we like. The valuation multiple is also attractive relative to historical averages in the last five years (ranging from 20x to 33x). We are okay to enter the name at this level on recent weakness. 
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Shares are dipping now, but in mid/late August he expects a rally to new highs. This is based on ROK's historical patterns.

Their last quarter was a miss and shares have fallen a lot. It's bottoming. Before buying though wait till the next quarter. 

He is bullish on the industrial sector and new manufacturing will need clean energy. He prefers Eton Corp (ETM) over Rockwell in this space, Eton supplies electrical equipment for automation and precision manufacturing.

Sideways. 17-18% drop at end of January, small recovery, but now in very tight trading range of $268-290. Support around $260, resistance around $300. Don't buy now. If you own, make a trading/exit/reduce plan and follow it.

More on the hardware side in the robotics ecosystem. 12-month price target of $286. Massive on the programmable-logic controller side of robotics. Big supplier to ABB and other robotic hardware companies that do the mechanics. Hardware + software, and even security. 

February earnings beat on top and bottom, raised guidance. Only downside is margins are a bit skinny. Yield is 2.11%