Investor Bill Baruch said he likes Rockwell Automation as sticky wages further increase employers’ interest in trimming labor costs. Rockwell has lost about 25% of its value so far this year. That means it has performed worse than the S & P 500 , which has shed more than 15% in the same period. But Baruch, founder of Blue Line Capital, said on CNBC’s “Halftime Report” that Rockwell could be a winner as rising wages elevate automation as a way for companies to keep costs down amid a tightening economic backdrop. Labor is considered an area of the economy that has not as clearly showed impacts of interest rate hikes from the Federal Reserve. “Let’s talk about a stock expecting double-digit earnings growth in 2023,” said Baruch. “As wages go up, more automation.” Data released Friday showed nonfarm payrolls surpassed expectations in November, while the unemployment rate was unchanged. Average hourly wages jumped 0.6% from the prior month, and they climbed 5.1% from a year ago, also exceeding analyst expectations. That’s bad news for the central bank, which has typically looked to wages coming down as one indicator of a contracting economy. Meanwhile, the industrial automation company narrowly beat analyst expectations for per-share earnings and revenue in its fiscal fourth quarter, according to FactSet. Baruch isn’t the only one taking note of the stock – but not necessarily for the same reason. Bernstein analyst Chad Dillard said in a note to clients that Rockwell could see upside due to the Inflation Reduction Act’s focus on increased grid investments and domestic manufacturing to support renewable energy and electric vehicle production.
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