Investors looking to take advantage of the incredible growth trajectory of the technology sector will typically begin to look in technology firms operating in sub-sectors such as e-commerce, big data, or cryptocurrency for outsized returns. In this article, I’m going to go off the board and discuss one perhaps less-well-known company with an incredible growth trajectory and the ability to provide investors with potentially more upside than the aforementioned technology niches due to the fact this company has only recently begun to take off.
Cognex Corporation (NYSE:CGNX) is a company which provides robotic vision/imaging systems, providing high-tech cameras to companies looking to enhance productivity via robotics. From airport luggage sorting to production line defect detection, the cameras provided by Cognex are currently put to use in a wide range of world-class companies, providing essential services to said companies at impressive margins.
The company has a net profit margin of 35%, with a return on equity of 23%, numbers which support Cognex’s relatively high valuation multiple of approximately 45 times trailing earnings. With a five year revenue growth rate of 24%, Cognex has a proven track record and a demonstrated ability to provide essential services to high-margin customers at breakneck speed, resulting in the potential for continued long-term growth.
Currently, Cognex trades at a discount of approximately 16% from its peak seen in late 2017. I would suggest investors take a look at Cognex on any continued weakness, given its growth potential and recent price softness.
Invest wisely, my friends.
