What are the “Ride the Robot Revolution” stocks?

DeHaemer: "owning these three stocks today would be like getting in on Microsoft, Apple, and Dell at the beginning of the computer era."

By Travis Johnson, Stock Gumshoe, November 12, 2013

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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!


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31 Comments on "What are the “Ride the Robot Revolution” stocks?"

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birches
Irregular
0
birches
November 12, 2013 1:59 pm

I have done really well with Mazor Robotics, MZOR. It is a robotic surgery guidance system focused on spinal and brain surgery. It is not used for soft tissue surgeries and does not remove the surgeon from the surgery, so it is not vulnerable to the same malpractice suits that are being lodged against ISRG. It is pricey, perhaps at these levels, but it is in its infancy of being adopted and just raised $46 million to increase the their sales and marketing efforts in the US.

Sam
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Sam
November 12, 2013 7:30 pm

I looked into what they do and it is the most practical approach. They have done pretty well, since the IPO and there is good potential. The best part I liked is it is a tool for surgeons to improve the surgery process. I don’t know but pricewise it should be at an excessive price. Besides, I don’t see any competition. Therefore they could have very good sells especially in brain surgeries.
Thanks to Patricia for the tip. If you are a doctor by any coincidence, I will double my stakes.

birches
Irregular
0
birches
November 13, 2013 1:12 pm

Hi,

Not a doctor. But, if you want a doctor’s opinion, I don’t think you can do any better than Johns Hopkins and Cleveland Clinic – they were involved in the study, proof of concept that led to Mazor’s FDA in the USA. And they just performed their first successful deep brain surgery to treat Parkinson’s in the USA.

birches
Irregular
0
birches
November 12, 2013 2:00 pm

I do like iRobot.

vivian lewis
Guest
0
November 12, 2013 2:07 pm
Hello Fellow Trekkies I own a robot stock, an ADR, bought despite my Japan correspondent saying it was dead money. Fanuc hass ticker symbol FANUY. It is not in my model portfolio at http://www.global-investing .com because my reporter hates the share. So this is Vivian on her own. I own the Japanese version which trades as JP:6954. The main reason I bought it despite the flak is that I met the firm in Paris some decades ago and discovered how auto assembly lines use robots; and because I think there will be a revival in car purchases because them old… Read more »
pjakobs
Member
0
pjakobs
November 12, 2013 2:51 pm
I just want to mention that I think it’s really cool to see that somebody knows the czech history of the word “robot”. Robota means work in slovak, a close relation to czech (and formerly part of “czechoslovakia”). I’ll give your suggestion of Fanuc a look. I think there’s definitely still more money to be made in industrial robotics than robots for the home. Artificial Inteligence technology right now is great at making robots fit for a specific purpose, which is what you need in a factory. For home use, most people would not want a separate robot for the… Read more »
Dusty
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Dusty
November 16, 2013 8:18 pm
But you do have separate robots in your home for all those different chores. OK, you wash your clothes by beating them on and with rocks down at the river. But most of us. The robots are called: washing machine (clothes); clothes dryer; dishwasher; refrigerator; microwave oven; central air (heat and air conditioner are either two robots or a combined function robot). In your car there are a whole list of robots including the systems to provide proper amounts of air and fuel to the combustion chambers, the cruise control, power braking systems, automatic transmission, more. Your cell phone is… Read more »
Albert D
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Albert D
December 26, 2013 10:21 am
I don’t understand your argument against robots with different roles in the home. A humanoid robot with the capabilities you described might not come down under $1M for 30 years or more. Most of their expensive capabilities: walking, visual recognition, cognition, high tech batteries… would make up the bulk of what you are paying for. Who would pay for all that? The Waltons? Whereas, owning 4-5 different robots that do all the things you describe above might only cost $2-3 thousand dollars in 10 years. I agree with you that there is more money in industrial robotics than home robotics,… Read more »
Wilson Turner
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Wilson Turner
November 14, 2013 11:14 pm
I posted this same comment in Part 2, but just in case someone’s skimming these comments and not those… —————————————————– A comment about FANUC — they are/have been partnered with General Electric to provide various industrial control platforms and software. I’ve worked a little bit with their turbine control programmable logic controllers (in power generation). Here’s a wikipedia summary that eclipses my limited knowledge: http://en.wikipedia.org/wiki/GE_Intelligent_Platforms As a technician, I can say that the GE-Fanuc stuff is disliked because it’s very difficult to work with/troubleshoot/etc., versus other industrial controls companies like Allen-Bradley (ABB). That said, there’s been no indication from anything… Read more »
Buddy
Guest
0
November 12, 2013 2:14 pm

This could be a good long term growth stock. However, there seems to be a lot of expectations already in this stock.

I would tend to look at some other stocks that may still be “under the radar”. For example, we just purchased a Bissell steam mop. I think that something like that would be of interest. For example, Addus Homecare went (according to charts) from $5/share in January to $25/share today. Too late on that one.

dennis
Guest
0
November 12, 2013 2:32 pm

Oil searching robots,Saab Seaeye, Oceaneering International andMazor robotics. Try some of those.

Dusty
Guest
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Dusty
November 12, 2013 2:33 pm
You stepped on one of my nerves. I had my own doubts but bought an iRobot Roomba a couple of years back. It is too nice to start up and let clean the (wall to wall) carpets. It does get into trouble now and then and needs human help, but does a better cleaning job than the big human-operated vacuums. It does not tie up my time vacuuming, just hums and bumps around and the carpet is very clean. Vastly cheaper than a maid and none of the problems with personalities or other personal problems. And, ready to go 24-7-365.… Read more »
kraftidiot
Member
0
kraftidiot
November 12, 2013 2:36 pm
I too like the idea of riding the robot revolution but it is hard to do. I particularly don’t like this company because: 1) These days doctors turn patients over to resident hospitalist physicians when they enter a hospital. This company needs to create a culture change to sell its product. 2) Any data that can be collected through a robot can be collected by a technician. Doctors won’t use these things. Hospitals have lots of devices for collecting data. They will let some lesser paid technician wheel the appropriate data collectors in the room. Doctors will review the data… Read more »
Eileen M Pleticha
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Eileen M Pleticha
November 12, 2013 3:32 pm

I am interested in the development of robots and the uses in the real world.

Please send me further articles about this topic as well as firms developing the robots.

Eileen M Pleticha

Eileen M Pleticha
Guest
0
Eileen M Pleticha
November 12, 2013 3:34 pm

Please send me articles about the development and use of these robots in the real world.

Eileen M Pleticha
Guest
0
November 12, 2013 3:37 pm

Please send me articles on the development and use of robots today.
Thank you,
Eileen

Jerry
Guest
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Jerry
November 12, 2013 4:40 pm

Technically, the chart is NOT a buy

thomas0840
Irregular
86
thomas0840
November 12, 2013 7:40 pm

Got in MZRTF in May, up 56% . Tripled from Jan. to May before me.

Opposeablethumb
Irregular
824
November 13, 2013 10:56 am

I copped out an invested in a world wide exposure ETF (ROBO) just out a week or so, high expense ratio of .95 so we will see if they are worth it. I will have a little of everything. Probably is the future but will let the tide carry me for now.

george
Guest
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george
November 13, 2013 11:15 am

Although priced too high, the company itself seems reasonably run. When people started hacking the Roomba, instead of trying to make it more difficult in subsequent versions, they made it easier, releasing an SDK, and also a version that you can drop your own payload into (more fun for me). Opposite the response of Apple and others. So it would seem that they are flexible and willing to take advantage of opportunities, at least in this instance.

John
Guest
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John
November 13, 2013 11:44 am
I got into irobot in late 09′ but jumped out early in 12′ when they couldn’t sustain their government contracts. They are truly an interesting company for a multitude of reasons. The medical piece is interesting, thougth I’m not sure high level diagnostics is where the revenue will come from. Another important angle is their connection to the military. They have several automous robot projects mentioned above and a couple of pieces of the close battlefield “drone/robot”. There was an article featured in Wired a couple of years ago that discussed it. Until there is some more movement there, I’m… Read more »
Beth
Guest
0
November 16, 2013 5:21 pm

I had one of the Roomba vacuums about 5 yrs. ago and it was worthless. I had to spend more time cleaning the dirt out of the vacuum brushes and rollers than I would have spent vacuuming the floor myself. Those things might be fine on a sparsely furnished wooden floor, but on carpet — forget it!

Dusty
Guest
0
Dusty
November 16, 2013 6:27 pm
That’s just the point!! My Roomba pulls out dog hair and dirt that the big human-operated vacuums do not even know is there. Use the supplied tools to clean the brushes and I found a pair of ‘electronics’ needle-nose pliers with very thin jaws in a hardware store that reaches into the crannies on the Roomba parts and pull out dog hair. Then a comfortable place to work is needed; a countertop above a trash can. 5 minutes to clean the machine. Yes at first it needs cleaning every half hour but it leaves the carpet cleaner than ever before.… Read more »
ET
Guest
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ET
December 1, 2013 1:21 am

Might be easier to get rid of the dog….:)

bob-fay
Irregular
0
bob-fay
December 10, 2013 9:27 pm

Patricia Gustin –
Any relation to the late Jon Gustin ?

tash
Member
0
tash
December 11, 2013 6:19 pm

Did Travis find out what the other two robot stocks were in De Haemers teaser/report:
Stock 2 – Underwater Robots and Stock3- The Robot Factory

Thomas Lepere
Guest
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Thomas Lepere
December 14, 2013 6:25 pm

Thomas Lepere says to Travis: Notify me of Follow-up comments via e-mail!

cyprus
Guest
0
cyprus
December 31, 2013 5:51 pm
Being a technocrat at heart, I do own all the robotic companies mentioned, as well as, a few others, such as AVAV: makers of aerial drones. Seems like everybody, GOOG, AMZN, UPS…etc, are trying to find some ways to use those quadcopters. Bought MZOR a few months after it became public on the Nasdaq. Not just for their spinal procedures (if that wasn’t good enough) but for their intended expansion into doing cranial procedures, like deep brain placement of stimulation implants. …the next ISRG? If I may suggest; You might look at and keep an eye on “Baxter” from Rethink… Read more »
fbrownlo
Member
0
fbrownlo
April 27, 2014 1:55 pm

Good friend has a smallish manufacturing business, finally driven nuts by federal & state interference in his business, turned the whole op. over to robots, and is doing fine. There’s a motivation for you, bound to spread & catch on. I should ask him who made his robots.

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