Fund manager reveals the under-the-radar global automation stock he prefers to its U.S. rivals

Published Mon, Nov 20 20237:39 PM EST

Amala Balakrishner @in/amala-balakrishner @_amalabk

It's been a big year for Big Tech, with U.S. favorites Nvidia and Meta Platforms among the stocks that have soared in 2023. But for those investors who fear they might have missed the boat, portfolio manager Karen Kharmandarian has an under-the-radar global tech pick. He likes Japanese industrial automation company Keyence , which makes factory automation equipment. "This company would be one we would prefer to U.S. companies when it comes to machine vision systems," Kharmandarian, senior portfolio manager at Thematics Asset Management, told CNBC Pro on Nov. 8. Machine vision systems use cameras and other technology to help automate inspections at manufacturing facilities. Keyence's counterparts in the U.S. include Cognex and Zebra Technologies , which both manufacture machine vision systems and related technologies. "Keyence probably has better technology than these companies in the U.S. It has very good management and went through Covid almost unscathed in terms of procurement of critical components to design the products. [We like it for its] attractive technology and diversified markets," Kharmandarian added. He oversees around $650 million in assets under Thematics Asset Management's AI and Robotics Fund, which seeks to find "attractive gems" within the tech space. 6861.T-JP YTD mountain Year-to-date shares in Keyence Year-to-date, shares in Keyence were up around 22% to 62,280 Japanese Yen ($418.95) on Nov. 20. His comments are echoed by Jason Kondo , an equity analyst at Morningstar, who noted after its last earnings report that it had outperformed its peers. "We attribute this to Keyence's strong know-how with machine vision/sensors, which has enabled the company to offer low-cost solutions that immediately realize savings and address labor shortages," he added. Kondo — who considers Keyence's shares "fairly valued" — has maintained his fair value estimate on Keyence at 58,000 Japanese Yen. Of 18 analysts covering Keyence, 15 have a buy or overweight rating on the stock with an average price target of 74,676.50 Japanese Yen, according to FactSet data. This gives the shares upside potential of around 20%.