As we look ahead to 2020 and beyond, policymakers and economists are being forced to reckon with the transformative potential of automation. Some researchers estimate that automation could cost over 350 million jobs worldwide in the coming decades. Instead of dreading this change, investors should identify companies that are in a great position to win big as automation picks up.
This is all the more reason to hold these potential growth monsters in your TFSA for the long term. Let’s look at two top stocks that could see big gains due to automation in the coming years.
BlackBerry has made a successful transition into a software and services-focused company since its hardware business floundered at the beginning of this decade. Shares have climbed 6.9% in 2018 as of close on May 15. It has made an effort to focus on autonomous vehicle software recently — a strategy that could pay off hugely going forward.
According to a report from Research and Markets, the autonomous/driverless market is expected to post a compound annual growth rate (CAGR) of 36.2% from 2018 to 2023. The study projects significant growth over the next decade in Level 2 and Level 3 autonomous cars, which boast advanced driver assistance programs like collision detection, lane departure warning, and adaptive cruise control.
Another report from IHS Markit Ltd. projected that more than 33 million autonomous vehicles will be sold worldwide in 2040. Compare this to the 51,000 units forecast to be sold in 2021. This is a long bet for BlackBerry and its potential investors, but one that carries tremendous promise. In the fourth quarter of fiscal 2018, it hit a quarterly record for software and services revenue, with 70% of it reported as recurring.
ATS Automation Tooling Systems Inc. (TSX:ATA)
ATS Automation is a Cambridge company that designs and builds custom engineered turnkey automated manufacturing and test systems as well as systems consulting to its customers. Shares of ATS Automation have increased 12.8% in 2018 thus far. The global factory automation market is expected to post a CAGR of 3% from now until 2021.
ATS Automation is expected to release its fiscal 2018 fourth-quarter results on May 17. In the third quarter, the company reported revenues of $277.6 million, representing a 17% increase from the prior year. Adjusted earnings from operations reached $29.3 million compared to $22.5 million in fiscal 2017 Q3. Order bookings rose 10% year-over-year to $311 million, and the period end order backlog was $689 million, which was 9% higher from the same period in the previous year.
In Q3 fiscal 2018, the company possessed $643.5 million in unused credit facilities. Shares of ATS Automation have soared 52.7% year over year. The company reported increased business in its life sciences segment in Q3, and investors should be watching Q4 earnings closely. ATS Automation is a growth stock that belongs in any portfolio.