Christian DeHaemer is pushing a newsletter called Technology & Opportunity with the idea that you can “Ride the Robot Revolution” and make massive gains, just like getting in early on the computer revolution by buying Apple, Microsoft or Dell 30 years ago.
And I think it’s a new letter, though I’m not certain — it’s a relatively inexpensive one, so he’s probably not pushing the really super-teeny stocks with $100 million market caps (or even less), but you never know. He does describe this letter as looking for recommendations that let you “buy advanced, unproven technology stocks on the cheap.” So far the “special reports” they’ve chatted up have been in typical tech hotbeds like biometrics and military technology.
But today it’s all about robots — here’s a taste of the ad to get your juices flowing:
“Remember, early investors in Microsoft had a chance to make a stunning 82,000%. Investors in Apple had a chance to make 32,000%. And investors in Dell had a chance to make 53,000%.
“Early investors in robots will see the same opportunity.
“NOW is the time to get on board. We’ve reached a tipping point, and there is no turning back.
“The three companies I’m going to tell you about in a moment are absolute home runs waiting to happen.”
Now, I’ll tell you up front that I’m going to look into the first of these companies today, but I won’t have time to cover all three just yet so you can tune in tomorrow for that piece (why, you ask? The Gumshoe’s life is a complicated one … and today he has to take his dog to the vet so unspeakable things can be done to the poor guy … I regret that there are no robots that can drive him there just yet).
The big picture spiel on robots seems to be that we’re finally at a “tipping point” where the technology that has enabled industrial robots (like the million-dollar welding robots that worked on your car in the factory, or the Intuitive Surgical Da Vinci system for laparoscopic surgery) and “novelty” robots (like the vacuuming Roomba) are converging, with real, capable robots that can do human jobs with little supervision becoming cost-effective for small businesses.
Here’s how Dehaemer puts it, excerpted:
“The Tipping Point has Been Reached!
“Tipping Point #1: Amazing Artificial Intelligence
“That’s right, robots are getting smarter.
“For example, IBM created a robot named ‘Watson’ ….
“In order to demonstrate his prowess, IBM put ‘Watson’ on television’s Jeopardy! against former champions Brad Rutter and Ken Jennings… Using a robotic finger to press his buzzer, Watson beat the champs for a $1 million prize….
“Watson is now reviewing case histories at Memorial Sloan-Kettering Cancer Center, learning to make diagnoses and treatment recommendations….”
“Tipping Point #2: Stunning Technological Advances
“Thanks to stunning technological advances, the things robots are now able to do are amazing.
“For example, researchers at the Harvard School of Engineering and Applied Sciences have developed a new sensor that is sensitive to the level of one gram. This gives today’s robots a very gentle ‘touch’ and makes them versatile and incredibly nimble.
“In addition, scientists at Stanford University have developed artificial skin that gives robots the ability to ‘feel’ objects as light as a butterfly….
“Google has developed robot cars that are now officially legal in California. Armed with video camera, radar sensors, a GPS, a laser range-finder, and a computer system… the fleet of 12 cars (mostly Toyota Priuses) have already logged over 300,000 miles of driverless travel on California’s highways.
“Tipping Point #3: Dramatically Declining Costs
“As technology improves, the cost of robots has declined….
“Consider the new sensor developed by Harvard University… Not only is the sensor better than previous sensors, but it is also ten times cheaper than anything on the market.”
So what, then, are these stocks that can make you rich as you “ride the robot revolution?”
Let’s take a look at the clues:
“Robot Stock #1
“Ride the Robot Revolution for 15x Your Money
“The company I’m recommending today has developed a robot that will help solve the doctor shortage, saving lives in the process. And using this robot, doctors can visit patients from anywhere in the world.
“The robot stands five feet tall and has a large computer screen for a face. The robot is armed with patients’ digital medical records, a state-of-the art navigation system, and a full arsenal of medical equipment, including a digital stethoscope, otoscopes (used to look in ears), and an ultrasound imaging system.
“When a doctor wants to visit a patient, he doesn’t even need to set foot in the hospital. Simply by pushing a button on his iPad, the doctor can send the hospital-based robot to the patient’s room.
“Because the robot has dozens of sensors, it can navigate busy hospital corridors on its own, completely autonomously!
“A two-way video allows the doctor and the patient to see and speak with each other, and with a zoom feature, the doctor can read the patient’s chart and even check his eyes for dilated pupils.
“The company just received FDA approval for their hospital robots.
“And get this: They are the ONLY company to have the approval of the FDA, giving them a virtual monopoly on this technology.”
Well, that’s enough for any self-respecting Thinkolator to process — but just to be sure, we get a few more clues:
“Hospital robots are only one small aspect of this company. In addition, they have developed security robots that are already saving lives on streets and battlefields around the world….
“Robots Provide Frontline Defense
“These robots perform bomb disposal and other dangerous missions for troops and first responders.
“In fact, a fleet of their robots was deployed during the Boston Marathon bombings manhunt.
“They were also on the scene during the Fukushima nuclear plant accident in Japan, where intense levels of radiation had made it too dangerous for human rescue workers to operate.
“More than 5,000 have been delivered to military and civil defense forces worldwide, and they have been used extensively by U.S. troops in Afghanistan and Iraq.
“This company just received a multi-million-dollar contract to provide security robots to Brazil for the 2014 World Cup….
“… they’ve developed a squadron of “home robots” that could make housework a thing of the past.
“For example, they have developed robots that vacuum, wash floors, clean pools, and more.”
OK, so that makes it pretty clear: this first pick of DeHaemer’s for the “robot revolution” is probably the first robotics stock that most investors would think of: iRobot (IRBT)
Which does indeed make that Roomba robot, along with mopping robots and pool-cleaning robots and the freaky-looking gutter-cleaning robot … though really, if you have to climb up a damn ladder to put it up there what’s the point of a robot? I want a robot that can climb up there itself, otherwise hiring a fearless teenager seems a better way to go on the gutter-cleaning front.
But I digress. The consumer part of iRobot is probably what most of us are familiar with, given the near-ubiquitous Roomba vacuum, and that’s a decent business for them — they just announced a new high-end Roomba for the holiday season, and I assume they’re under some pressure because there’s a lot more competition in the low-end “robot” vacuums and pool cleaners and such these days — and it’s growing, but they seem to be positioning for growth beyond the home over the next several years.
Right now it looks like the home-based robots, mostly the Roomba, generate about 75% of their revenue, with the “telepresence” robots like the hospital one described and some “collaboration” robots that are essentially mobile videoconferencing tools being an emerging business (under the names Ava and RP-VITA) and the military and security robots (like the PackBot for bomb disposal, or FirstLook for surveillance) generating most of the rest of the current revenue. Within the home-based stuff, iRobot has been putting a fair amount of energy into its patent fights as they try to keep competitors from overwhelming the market with “me too” robot vacuums that look and perform almost identically … even as they keep pushing development of “next stage” robotic servants in the home, including the newish robot mop and their latest brushless Roomba.
I looked at IRBT a bit back when it first IPO’d in 2006 and didn’t decide to buy it, but I was tempted — the idea of being in early on a developing industry is compelling, even if you think robot vacuums are silly. Do note that I also thought camera phones were a moronic idea that would never catch on, and now I use the camera on my phone probably more than I use it to talk to people … so what do I know? I think a Roomba would throw a hobo stick over its shoulder and hit the road after a day of dog hair and legos here at Castle Gumshoe, but I also know some folks treat these little robot vacuums almost like pets and they’ve grown far more capable over the years.
The telepresence stuff is really quite early on, though iRobot has been developing the technology for several years — the hospital piece of it is a result of iRobot’s collaboration with (and investment in) InTouch Health, which basically builds the doctor telepresence stuff on top of iRobot’s platform, and it seems to be doing well in getting more hospitals signed up but is probably a few years from making a big difference on revenues.
IRBT used to get a much bigger boost from the defense and security business, which was close to half of revenue back in 2010 and 2011 but is now more like 20% of revenue, even a bit less — and the budget austerity and military cutbacks and government shutdown haven’t helped, they contributed to iRobot’s weak third quarter that helped bump the shares down a bit a few weeks ago. It’s not easy to guess what the stock will look like a year from now, with low-end products cutting into margins and high-end products coming out to help on the other end (the new Roomba is $700), but they are clearly the home robotics leader both in the US and globally, and they’ve grown nicely.
If you want to fall in love with iRobot shares you probably do need to foresee some more breakout growth either in home robotics, with Roombas and their cousins getting more of the market (they have about 13% of the vacuum market in the US), or in one of their other segments, because the stock is just plain expensive. Analysts see them growing earnings at less than 10% per year into the future, which is fine for a normal company but not good for a stock that’s trading for 50X current earnings — even the folks at Morningstar, habitually quite value-oriented and stodgy in their price targets, think it should have a premium value around $27 … but the stock is at about $33 right now. If I were seeing insider buying, or a huge surge of potential growth, I’d be happy to buy at prices like this, and the company does some very cool things in an emerging industry … but personally, my first reaction is “too expensive.”
I could be wrong, of course, that’s me after just an hour of scanning through their recent reports and presentations and some analyst commentary … if it’s your money you’re investing, you would, of course, do better to think for yourself. So whadda you think? Let us know with a comment below.
And don’t worry, we’ll look at the other two robot stocks tomorrow — until then, stay tuned and talk amongst yourselves!
Personal Capital is an advertiser with Stock Gumshoe, but Travis also uses it every day for his personal accounts and finds it invaluable. Here's what he said: "They offer a great (and genuinely FREE) 'second opinion' for your financial plan, but what I love most is their automated financial dashboard -- it will look at all your assets and debts, tally up your asset allocation, project where you'll be at retirement, and suggest ways to manage risk or improve returns. It's free, I think their free tools are great, and I think it's worth checking out -- you can do so here.