Free Long term hold research: Symbotic $SYM

Each week I send a deep dive on a stock that I am confident about as a long term hold.

This week as I mentioned will be free until the end of this year.

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So far this year I have made 32 recommendations. The portfolio gain has been 142% with 21 positive and 9 negative and 2 are at the same price as my recommendation.

Summary

Symbotic capped FY23 with strong revenue growth of 61%, reaching a record $392 million. Though still unprofitable, losses narrowed (-$0.14 vs -$0.15 YoY) as adjusted EBITDA improved significantly. Analyst estimates see continued revenue gains in FY24, but expect near-term losses to persist.

Symbotic is a technology company that provides warehouse automation solutions for the retail, wholesale, and food & beverage industries. The company's flagship product is the Symbotic System, which is a fully integrated, end-to-end robotic and software platform that automates the entire warehouse process, from receiving to putting away to picking to shipping.

Symbotic stock has formed a bull flag on the weekly and monthly charts. I am buying now with the intent to hold for the long term (1+ year). The current price is $53. The position entry has a stop loss at the 50 MA at $44. I year target is in the $75 range.

Overview

The Symbotic System uses a combination of advanced robotics, machine learning, and software to deliver unmatched speed, agility, accuracy, and efficiency in the warehouse. The system can handle a wide variety of products, including cases, pallets, and totes. It can also be configured to meet the specific needs of each customer.

Symbotic's customers include some of the world's largest retailers, such as Walmart, Kroger, and Albertsons. The company has also installed its systems in warehouses for food & beverage companies, such as Pepsi and Coca-Cola.

Symbotic is headquartered in Wilmington, Massachusetts. The company was founded in 2014 and went public in 2021.

Benefits of using the Symbotic System:

• Increased efficiency: The Symbotic System can help warehouses operate more efficiently by automating many of the manual tasks that are currently done by workers. This can lead to significant reductions in labor costs and operating expenses.

• Improved accuracy: The Symbotic System uses advanced robotics and machine learning to ensure that products are picked and packed accurately. This can help to reduce out-of-stocks and improve customer satisfaction.

• Increased flexibility: The Symbotic System can be configured to meet each customer’s specific needs. This means that warehouses can be easily adapted to product mix or demand changes.

Market, Industry and Competitors

The global warehouse automation market is expected to grow from $19.88 billion in 2022 to $54.60 billion by 2030, at a CAGR of 10.9%. This growth is being driven by a number of factors, including the increasing demand for e-commerce, the need to improve warehouse efficiency, and rising labor costs.

Symbotic's main competitors include:

6 River Systems: 6 River Systems is a warehouse automation company that develops mobile robots that can be used to pick and pack products in warehouses.

Locus Robotics: Locus Robotics is a warehouse automation company that develops autonomous mobile robots that can be used to pick and pack products in warehouses.

Geek+: Geek+ is a Chinese warehouse automation company that develops a wide range of robotic solutions for warehouses, including picking robots, sorting robots, and palletizing robots.

GreyOrange: GreyOrange is an Indian warehouse automation company that develops a wide range of robotic solutions for warehouses, including picking robots, sorting robots, and palletizing robots.

RightHand Robotics: RightHand Robotics is a warehouse automation company that develops robotic arms that can be used to pick and pack products in warehouses.

Unique Differentiation

Symbotic's unique differentiation is its use of advanced robotics and machine learning to deliver unmatched speed, agility, accuracy, and efficiency in the warehouse. The company's flagship product is the Symbotic System, which is a fully integrated, end-to-end robotic and software platform that automates the entire warehouse process, from receiving to putaway to picking to shipping.

The Symbotic System is differentiated from other warehouse automation solutions in a number of ways:

• Speed: The Symbotic System can pick and pack products at a rate of up to 1,000 cases per hour. This is significantly faster than traditional manual picking methods.

• Agility: The Symbotic System is able to adapt to changes in product mix or demand. This means that warehouses can easily be reconfigured to meet the needs of different products or customer orders.

• Accuracy: The Symbotic System uses advanced robotics and machine learning to ensure that products are picked and packed accurately. This can help to reduce out-of-stocks and improve customer satisfaction.

• Efficiency: The Symbotic System can help warehouses operate more efficiently by automating many of the manual tasks that are currently done by workers. This can lead to significant reductions in labor costs and operating expenses.

Financials

Symbotic's revenue has grown significantly over the past 3 years. In fiscal year 2020, the company generated $37.8 million in revenue. This grew to $131.5 million in fiscal year 2021 and $490.0 million in fiscal year 2022. This represents a compound annual growth rate (CAGR) of 125% over the past 3 years.

Symbotic has not yet been profitable. In fiscal year 2020, the company had a net loss of $34.5 million. This narrowed to a net loss of $26.9 million in fiscal year 2021 and $17.4 million in fiscal year 2022.

Symbotic has generated positive cash flow from operations in each of the past 3 years. In fiscal year 2020, the company generated $10.9 million in cash flow from operations. This grew to $24.9 million in fiscal year 2021 and $37.3 million in fiscal year 2022.

The company's focus on large customers and its use of advanced robotics and machine learning give it a competitive advantage. Symbotic is also well-funded, with over $1 billion in cash on its balance sheet.

Risks

Some of the biggest risks for Symbotic:

• Competition: The warehouse automation market is a competitive market, and Symbotic faces competition from a number of other companies, including 6 River Systems, Locus Robotics, Geek+, GreyOrange, and RightHand Robotics.

• Technology risks: Symbotic's technology is complex, and there is a risk that the company may not be able to successfully deploy the technology consistently to generate business success for its customers.

• Customer risks: Symbotic's customers are large retailers and food & beverage companies. There is key customer risk in Walmart (which represents a large percentage (40%+) of revenue) These companies are facing increasing competition, and there is a risk that they may not be able to afford to invest in Symbotic's technology.

• Financial risks: Symbotic is a young company, and it has not yet been profitable. There is a risk that the company may not be able to generate enough revenue to cover its costs.

Technical Analysis

Bull flag pattern on both the weekly and daily chart. If it clears $54, this should go to $63 by year end. I would not sell if it goes lower, but keep a trailing stop loss at $44. For those of you who are short term traders, this is a very volatile stock with high ATR (Average True Range). It goes up and down 2-5% daily.