After turning in sluggish performance for the better part of a decade, some industrial technology stocks have been showing signs of life once again. Swiss robotics and electrification company ABB (ABBN.Y) is one of them. Shares are up 40% from one-year lows reached just four months ago in early October 2022 -- and are up over 80% since the start of 2019.

After the company released its final earnings report for 2022, shares suddenly don't look so cheap. Nevertheless, for investors interested in electric vehicles, electric charging infrastructure, and robotics stocks, ABB could be a far better option than what typically garners attention. Here's why. 

Balancing growth with higher profitability

Seasoned investors know that flat-out growth can only go so far. The bear market of 2022 proved that out. Many fresh IPO stocks from the last few years got wiped out because of a complete lack of profitability (embodied by many upstart EV manufacturing and EV charging stocks). 

Industrial giant ABB was already a profitable business, but has been doubling down on its highest growth segments (EV parts, EV infrastructure, and robotics) while simultaneously focusing on improving its profit margins. This combination has been a winning strategy as of late, especially with the company's orders for electric infrastructure and industrial automation on the rise in the wake of the pandemic.

To boost its profit margins on this growing backlog of orders, ABB spun off its combustion engine turbocharger business Accelleron Industries last year. It also made a handful of acquisitions, like the industrial electric motor division from its European industrialist peer Siemens (SIEGY 0.70%). Factoring in acquisitions and divestitures, ABB said 2022 revenue grew 16% on a comparable basis to 2021, and it expects at least 5% comparable growth in 2023. All the while, ABB's profit margins are on the rise.

ABB Operating Margin (TTM) Chart

Data by YCharts.

A better way to bet on vehicle electrification?

ABB's biggest (and one of its highest-growth and highest-profit-margin) business segments is electrification. ABB electrification includes electric motors and drives, power management hardware, and various enterprise software offerings for managing network-connected industrial equipment and fleets of vehicles. 

ABB electrification also includes EV charging station infrastructure. EV charging business models from small peers -- like ChargePoint (CHPT 4.82%), Blink Charging (BLNK -0.72%), and EVgo (EVGO -5.74%) -- have been problematic for early investors. Again, lots of sales growth, but these charging infrastructure businesses have been bleeding cash. 

CHPT Revenue (TTM) Chart

Data by YCharts.

ABB might have a solution for its shareholders. It has been getting private investment for what is now a separate subsidiary business called ABB E-mobility. ABB E-mobility has now raised 525 million Swiss francs ($568 million as of exchange rates on February 6, 2023) from private investors. ABB still has 80% ownership of the subsidiary, but it plans to IPO ABB E-mobility as a separately listed stock as market conditions improve (meaning when investor appetite for higher-risk stocks makes a comeback).

Why this subsidiary model for what could be a huge growth business in the years ahead? ABB E-mobility does little in the way of sales right now, and generates losses. By sharing the losses with other investors, ABB could continue to improve its own core business profit margins, all while enjoying the upside of its equity stake in ABB E-mobility in the coming years if the EV charging station business takes off. It could be a win-win for ABB (not necessarily ABB E-mobility) shareholders.

A top EV and robotics buy now?

After releasing its Q4 2022 earnings report, ABB stock trades for 26 times trailing 12-month earnings. It isn't cheap. However, if ABB can grow further this year and boost profit margins, it looks like a far better stock than many other EV manufacturers and EV charging businesses out there. The company also pays a dividend (currently yielding nearly 2.6% a year) and repurchases lots of stock ($2.9 billion in the last year, or another 4.5% of the current market cap). 

As industrial automation and robotics grow in importance in the years to come, ABB could be a top holding for investors that also want dividend income paired with possible stock price growth. I'm not ready to call this a best buy now, but ABB is an interesting business worth a close look right now.