This is part 1 of a 2 part series
Covid-19 is going to change the way our world operates for a long time. One transition I am predicting is the disruption of the global supply chain.
These last few months have shown the massive problems with a global supply chain when something unprecedented occurs. This bears the question though, why don’t companies already produce in the US?
Well, put simply, it’s expensive. Labor costs alone have a massive discrepancy when looking at the US versus a foreign country like China, Indonesia, or India. On top of that, energy costs and real estate costs can eat a good chunk of operating costs as well. If companies were to produce goods in the US, those goods would most likely be more expensive than a foreign produced product. So the question now becomes, how can we bring companies back to the US while keeping products cheap?
My answer; Robotics. Like I’ve said before, the largest cost for companies in the US is labor, so the idea of replacing humans with robots can dramatically reduce costs.
Unfortunately, another problem comes out of replacing people with robots; Unemployment. According to the US Bureau of labor statistics, in 2018 there were a little over 12 million jobs in manufacturing.
Introducing TeraDyne. TeraDyne is currently making most of its revenue (68%) off of semiconductor testing, which has become recently popular, but that’s not what I'm excited about for this company.
I’m excited about Collaborative robots, or should I say “Cobots”. These robots “work side-by-side with production workers to improve quality and efficiency”. So instead of replacing workers entirely, you can hire a few to work alongside these robots. At the end of the day this will result in a higher output and a cheaper cost. TeraDyne also has two highly regarded subsidies in the sector, the first being Universal Robots (“ the most trusted and widely deployed cobot manufacturer in the world), and the second being Energrid (“the leader in motion control software that makes it possible for collaborative robots to perform sophisticated tasks safely, accurately and quickly”).
In 2019, 68% of Teradyne revenue was made from Semiconductor testing, the 2nd highest revenue generator was industrial automation at 13%. I would watch this number on a quarter by quarter basis and would love to see it hit 20% by the end of 2020.
Now for the best part, the EEON stock scores.
Like this stock needed anymore reason to buy it. If you know me, you know I love profitability scalability, and growth in my stocks. Look at how $TER ranks throughout EEON’s lists.
This security has a lot of potential to it. It’s very scalable, already profitable and growing. This is a perfect mix for a stock like TeraDyne and is one of the many reasons I will be holding this stock for 2-3 years.