This Dividend-Paying Stock Also Has Huge Growth Potential

Industrial giant ABB (ABBN.Y 0.18%) is already stable, profitable, and a dividend payer -- but it also sees opportunity for great growth, especially in its segment providing solutions in the electric vehicle (EV) space. In this episode of "The AI/ML Show" on Motley Fool Live, recorded on Feb. 16, Fool.com contributor Jose Najarro discusses why investors should give the robotics company another look.

Jose Najarro: I feel like in this market, when we think about AI and the powerhouse, we usually think about things like the graphics cards. Nvidia is probably one of the first thing that comes to mind. But outside of that, in the data center, you need to make sure you have plenty of power. ABB provides solutions for there. The other thing that they also really focus is in e-mobile. Here's electrification of vehicles, which seems to be a really strong trend right now. This is their biggest revenue segment. These are quarterly revenue. This is, I want to say, a little bit less than half of total revenue. The other market that I think is super cool is the Robotics and Discrete Automation. Here, this is a company that focuses in creating pretty cool robots. These robots are used for numerous things. Many people might know them for the heavy manufacturing in car production, but we're going to take a quick look at, this is a company that's focusing on making these robots smarter. They say collaborating robots. When you say collaborating robots, you mean robots that can work well with other people. That's pretty interesting. This is their smallest segment, but I do believe it's one that's going to grow over the years. We can see market cap is 72 billion. I also wanted to take a quick look at this because I normally focused in growth stocks to some extent, but I also like to learn about maybe those that might not be a heavy grower stock, but can still make a difference in that market. This is one of them. This is probably more of that, hey, someone who's looking at some dividend yield, but also trying to get into this automation market, into this electrification market that's moving the market right now. This currently has a dividend of 2.4%. Let me just take a quick look at, where do I have it, I have it here, I believe. ... No, sorry.

Jason Hall: Like every day for me, Jose.

Najarro: It wasn't actually the same one. I also wanted to look at price change. We can see, this is one that in the past year has performed pretty well compared to the overall stocks that we've seen so far. This is also one trailing 12 months, plenty of revenue. Like I mentioned, not a heavy growth company, but one that has maintained a stable cash flow from operations. If we can take a quick look at their short-term cash and investments, it's pretty similar to that long-term debt. Remember, this is a profitable business. This is a company that also has a nice positive cash flow from operations and returning to shareholders. We can see, most recent quarter, it grew 5%. I still think 5% growth is impressive for a company, in a multibillion-dollar-cap company. I know some might disagree with it. Going back to the presentation and let me go with the slideshow. There are a few cool metrics, recent news that I thought were pretty interesting. They are heavily focusing in e-mobile solutions. They believe this is going to be a market that will grow dramatically in the upcoming years. They're really focusing on investing there. They have solutions for truck charging, so if you're a big truck fleet that's focusing on the electrifying your trucks, you are coming to ABB to get those trucks charging solutions. They recently acquired majority stakes in numerous charging station companies, not only here in the United States, but internationally. In China, they just increased their stake in the charging station there. They're really focusing in this e-mobile solution. They were also recently selected for e-bus solutions. I do believe the e-bus market might be an interesting one with with public transit. Then we can also see that they recently secured a $80 million order for traction and battery solutions for e-trains. This is in Spain, I believe this $80 million order. They're really focusing in this e-mobile solution. Now if we take a quick look at the robotics, they have recently partnered up with numerous AI companies to build better automated robots. I wanted to show some of the robots that they have. If you go to their investor presentations, they have a lot of great insight on the robots they create, for example, they partner up with this company called Sevensense. In Sevensense, they focus in things like 3D vision and mapping, so a way for your robots to see. Here they have a solution of, hey, this is maybe a cleaning robot at an airport, it seems. Because it knows where people are or because of its vision, it's able to move around them and work around its obstacles. Another one is they also partnered with a company called Covariant. Here they also focus in artificial technology. This is an ABB robot. Because of the partnerships with Covariant, this robot is able to either determine what type of packaging it's picking up and is able to put it in a special, either, let's say your e-commerce store, maybe you want to place it in a certain bin. If it's a product this small, if it's a product this big, it goes into another type of bin. Finally, they're already demonstrating. They have numerous robots. If one really wants to learn or just is fascinated with this market, I definitely would recommend checking out their website. They show so many different concepts for their robots. Here is one that they call YuMi, and this is one that's being used in the healthcare market, in the healthcare industry. This is taking things that will, maybe your health worker right now is doing a lot of repetitive tasks, this robot can help a lot with either just going out to fetch medicine, prepping the medicine, something that a healthcare worker might do right now but it's just time consuming, so this robot can help out during that process. I think, overall, this is a pretty interesting one to keep an eye out. Just final thoughts. This is not a true growth story. I feel like sometimes when we look at emerging markets, we try to find the true growth companies. But it could be a potential play, like I mentioned, for investors that might want to be in the market, have a dividend play but being a company that's very stable at times, but still providing some form of returns to shareholders. There is huge growth potential with the e-mobile solution and the automation robotics, that's where they're really focusing on. They also do provide strong solutions for data centers that are not as attractive investments, like I mentioned earlier on. I feel like many people just want to get into the processing power, the graphics cards, the processors out there. But sometimes you need to remember, hey, the electrification, the power solutions are equally, maybe even more important to keeping these data centers running. I don't know if these are risks, but something I wanted to show the viewers is one, this is a big company and it's focusing in many products. One solution might not move the other business too quickly. I think we've talked about in the show where it's difficult to turn a big ship compared to a small boat. It might not be one that growth investors might find attractive. But overall, the solutions that they have, the markets that they're hitting, I thought it was definitely a pretty impressive company to at least showcase.