Home / FINANCE / Markets Insider / RPT-UPDATE 1-Wall St Week Ahead-Tax-cut devise prompts account managers to gamble on automation (CGNX, FARO, AVAV, IPGP, ROK, EMR, MIDD)

RPT-UPDATE 1-Wall St Week Ahead-Tax-cut devise prompts account managers to gamble on automation (CGNX, FARO, AVAV, IPGP, ROK, EMR, MIDD)

(Repeats Friday story but changes)
(Adds Cognex shares overwhelmed 52-week high Friday)

By David Randall

NEW YORK, Oct 6 (Reuters) – The Trump administration’s plan
to cut corporate taxes might supplement some-more fuel to a already hot
rally in a shares of automation companies.

Fund managers from Columbia Threadneedle Investments, Hodges
Capital and Hood Capital contend that they design that companies
will use partial of their taxation assets to deposit in high-cost
machines that will concede them to revoke labor costs over time.

That would be a bonus for companies such as Cognex Corp
, that creates supposed appurtenance prophesy systems that are
used to fast arrange and fill orders in e-commerce warehouses,
and Faro Technologies Inc, that makes
three-dimensional measuring collection that can assistance reduce labor
costs on aerospace public lines. Cognex shares overwhelmed a
52-week high on Friday, while Faro shares during $38.20 were closing
in on their year-high of $40.60 reached in August.

“Scarcity of collateral is a thing that keeps companies from
spending income when it creates clarity to do so. Investing in
automation would be something that pays for itself quickly,”
said Matt Litfin, a portfolio manager of a $4.8-billion
Columbia Acorn fund, who owns shares of Cognex. Shares
of a association are adult 80 percent year-to-date.

Automation companies have rallied altogether this year as
corporate America looks for ways to contend margins and
productivity during a time when salary are rising and stagnation is

The $1.4 billion Robo Global Robotics and Automation Index
ETF, that includes a brew of large-cap companies such
as Rockwell Automation and Intuitive Surgical, is adult over 35
percent for a year to date, scarcely triple a 13.5-percent
gain in a extended SP 500 index.

Numerous account land are adult over 90 percent for a year
to date, including worker manufacturer AeroVironment Inc
, rigging manufacturer Harmonic Drive Systems Inc,
and laser association IPG Photonics Corp.

Large-cap automation companies, such as Rockwell Automation
Inc and Emerson Electric Co, have also posted
solid earnings so distant this year, yet smaller-cap companies
have seen incomparable share cost gains overall.

The Robo ETF has posted certain inflows each week since
President Donald Trump’s Nov election, partly due to
investor expectation of a corporate taxation cut. Investors have
sent $461 million into a account given early August, when the
Trump administration began publicly deliberating a skeleton to cut
the tip corporate taxation rates to 20 percent, from 35 percent.

Prominent Republican senators such as Bob Corker and Rand
Paul have criticized a Trump administration’s devise for its
potential to boost a sovereign deficit, withdrawal a passage
far from certain. Yet account managers contend that they see gains in
automation companies stability regardless of either a taxation bill

“Even 8 years after a financial crisis, companies are
still really focused on their bottom lines and maintaining
efficiency and capability as most as possible,” pronounced Eric
Marshall, a portfolio manager of a $743-million Hodges Small
Cap fund.

Middleby Corp, that creates intelligent ovens and other
kitchen apparatus used in grill bondage such as Panera
Bread, will expected advantage as companies demeanour for ways to reduce
labor costs as some-more states lift a smallest wage, he said.

Shares of Middleby are prosaic for a year, in partial due to
slow sales of a Viking line of high-end ovens after the
company had to remember some freestanding gas ranges that turned
on by themselves with business incompetent to spin them off. Hodges
said that notwithstanding a overhang, a association looks staid to
continue to grow as restaurants enhance and high real-estate
prices prompt some-more homeowners to ascent their kitchens.

“This is a association that’s got some genuine physical trends going
for it, and a corporate taxation cut will usually accelerate those
trends,” he said.
(Reporting by David Randall; Editing by Cynthia Osterman and
James Dalgleish)

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