by winston » Mon Feb 20, 2017 7:46 pm
not vested
iRobot Corp. (Nasdaq: IRBT).
Many people might look at IRBT simply as the company responsible for the Roomba – the automated robot vacuum that scoots around and distracts your pets while cleaning your floors. But iRobot is about more than just novelty cleaning products. Rather, they're tapped into something much larger.
According to NPD Group Market Research and iRobot data, the global vacuum cleaner market is a $6 billion opportunity with a compound annual growth rate of 4% to 5% a year. However, the global robotic vacuum cleaner market is growing at a compound rate that's 5X larger, or 20% a year.
The U.S. robotic vacuum market alone is just a notch under $1 billion. Japan represents another $450 million in potential. China's sales grew more than 70% last year, and the total market there may be nearly $2 billion within the next five years, according to Parthenon Analytics.
That's potentially 2X the United States and Japan combined.
Factor in lawn care, wet floor, and dry floor cleaning robots, and you're talking about a global category that's already $13 billion, according to Euromonitor, Mintel, and HBU estimates.
But I don't want you to get stuck on the vacuums alone. Those are just what iRobot produces today.
Try to get past that, because it's tomorrow that matters, and early adopters are key. They're the ones who drive consumer awareness, just like early Apple fanatics who turned Apple from a small startup to a worldwide phenomenon.
To almost everyone, the Roomba is still "just a vacuum cleaner."
That's your opening because markets don't yet reflect the profit potential associated with the next generation smart home hub that iRobot engineers are counting on.
At a Glance:
iRobot Corp. (Nasdaq: IRBT)
Price: $62.74
Market Cap: $1.7 Billion
The company presented at TechCrunch Beijing in late 2016, where CEO Colin Angle announced that the company is well-poised to expand further into the connected home market – an industry forecast to grow at a CAGR of 67% over the next several years.
IRobot's latest product, the Roomba 980, offers two key technologies that are the perfect entry to much more profitable products down the line.
The first is the robot itself. The Roomba 980 uses a technology called vSLAM navigation to power a "spatial context engine." Basically, it allows the vacuum to process any house map it builds as it cleans while also providing actionable analytics.
This means the Roomba can build a real-time database of your house and everybody who lives there, never get lost, and feed that information to a next-generation home "hub."
This, in turn, means the Roomba can potentially help you turn off lights accidentally left on, control temperature, close windows before turning on the AC, act as a security system, or even direct audio/video to occupied rooms.
IRobot's balance sheet is truly fortress-like with some $173.3 million in cash and no long-term debt as of the company's most recent financials. This gives management plenty of flexibility when it comes to critical, ongoing research and development, future acquisitions, and an ongoing $100 million stock buyback.
I think the stock will double within the next five years or less, which gives new meaning to the phrase "cleaning up," doesn't it?
Source: Money Morning
It's all about "how much you made when you were right" & "how little you lost when you were wrong"