After the rise of mechanisation, comes the rise of industrial automation, the use of computers, robots and AI to increase productivity in manufacturing.
Citing the rollout of 5G, and the disruption from COVID-19 as catalysts, Alex Duffy from Fidelity International picked a stock in this theme as the portfolio holding he is most excited about for 2020.
When we asked him about the stock, Alex told us:
“It is a leader in industrial internet of things and industrial PCs, and as that addressable market for industrial automation opens up, it's a company which we feel has got the potential to deliver significant solid double-digit rates of revenue growth over the long term”.
Watch or read the short interview below to find out more.
One of the things that I've really spent more time working on recently has been industrial automation. I think that's linked to things around Coronavirus - one of the big issues that [China's] had is getting employees back to the factories. And so, I think that industrial automation has been something that has been ongoing for some time within global emerging markets within China in particular. I think that probably gets fast-forwarded as a consequence of the environment that we're in now.
And it will also be enabled by the advent of 5G. So 5G networks will be rolled out through China over the next 12 -18 - 24 months. And that just creates a huge number of use-cases for industrial automation.
Now, one stock that's recently come into the portfolio is Advantech. It's a relatively smaller position within the portfolio at the moment as we gain conviction in that story, but it is a leader in the industrial internet of things and industrial PCs.
And really, as that addressable market for industrial automation opens up, it's a company which we feel has got the potential to deliver significant solid double-digit rates of revenue growth over the long term.
And that is a business which I think is very well managed at the same time and has a long management ownership culture that gives us some comfort that they'll treat capital well.
So that's one business that I would definitely highlight as being a particularly interesting play on that 5G industrial automation theme.
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