Robots Are the Future of Industry... And That Means Huge Tailwinds for This Company

In 1954, George Devol invented the world's first robot.

The "Programmed Article Transfer device" weighed 2 tons and was designed to move objects from one place to another. Its movements were accurate to within 1/10,000th of an inch.

In 1961, the patent office issued Devol the first-ever patent for a robot... He called his invention "Unimate."

The same year, Devol's company, Unimation, installed the first industrial robot on a production line at the General Motors auto plant in Trenton, New Jersey. Ford and Chrysler soon followed.

This robot worked with huge stacks of die-cast metal. It made door handles, gearshift knobs, and light fixtures, among other things, for the U.S. auto titans. By 1966, Unimation's robots were welding and applying adhesives and spray paint to vehicles.

Industry experts consider Devol the father, grandfather, and even great-grandfather of robotics. Fittingly, when the Automation Hall of Fame presented him with an award in 1997, a robot called Sico rolled over to him and said, "Father, so good to see you."

George Devol died on August 11, 2011. He was 99 years old. But his revolution lives on, as today's company shows...

Rockwell Automation (NYSE: ROK) traces its roots to 1903 with a motor controller designed for cranes. Today, it also makes software, industrial control systems and components, sensors, and integrated network security for modern manufacturing plants.

The company has two sales segments for its products...

The first is Architecture & Software, which accounts for about 45% of sales. This segment handles software design and infrastructure tools for automation and manufacturing. It includes five core platforms that let users build automated workflows, protect their networks, and control systems and robots.

The second segment is Control Products & Solutions, which accounts for the rest of Rockwell's sales.

With these businesses, Rockwell has set itself up perfectly for the next stage of manufacturing: Industry 4.0.

Research firm McKinsey calls Industry 4.0 the "next phase in digitization of the manufacturing sector."

Industry 4.0 is a major upheaval in modern manufacturing. It's a disruption fueled by a combination of four key components...

1. The flood of machine data combined with faster computational power and network connection using low-power networks.
2. Analytics and business-intelligence software tools.
3. New ways to interact with computers (touch interfaces and augmented-reality systems).
4. Advances in translating digital instructions to the real world (robots, 3D printers, and biofabrication).

The Industrial Internet of Things ("IoT") is going to mean everything is connected. Robotics and automation will play a huge part in the IoT. Research firm Accenture said it will usher in new economic growth that will account for almost two-thirds of world output.

The Industry 4.0 market was worth about $70 billion in 2018. And it's only going to get bigger from here...

One industry reports that it's growing at about 15% every year and will reach $155 billion by 2024.

Rockwell made a significant move to address this massive market... It's incorporating artificial intelligence ("AI") into its software offering.

The latest product is FactoryTalk Analytics LogixAI (formerly called Project Sherlock).

FactoryTalk Analytics LogixAI is an AI module that fits inside controller units on the factory floor and connects to specified applications or networks. Its algorithm helps map out, diagnose, and troubleshoot complex problems in industrial settings.

The module uses a type of advanced analytics software called "data-driven analysis." It offers companies expert analytics, diagnostics, and troubleshooting without having to staff an army of systems experts.

This AI learns an application using a simple physics-based approach. It "watches" the application as it runs. It builds a model of normal activity and looks for oddities across the network.

When anything outside the norm occurs, the software instantly flags it as suspicious and triggers an alarm. This includes anything from identifying large-scale cyberattacks to determining whether a temperature change in your manufacturing process is cause for concern.

This new phase in industrial automation is going to put some strong tailwinds behind Rockwell over the next several years.

In its most recent quarterly report, Rockwell's results blew away estimates. And the company boosted its full-year guidance.

Investors loved the report, sending the stock soaring higher.

And it recently held its annual investor day, where it highlighted everything from industry partnerships to its new automation and augmented reality offerings.

Robots and automation are driving the next phase in industry. And Rockwell has perfectly positioned itself as the pure-play way to ride that trend.

Sometimes investing is simple.