Will iRobot Own the Future?

With shares of iRobot (NASDAQ:IRBT) trading at around $19.00, is DIS an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

iRobot has a lot of potential, but it’s also one of those stories where there are threats to growth. In the long run, iRobot will most likely be a winner, but the long run can sometimes mean a decade or more. At the present time, iRobot has to contend with increased competition, potential cuts by the U.S. Defense Department, and weakness in the security business.

The good news is that iRobot has a thriving home robot business, healthy margins, respectable cash flow, and a stellar balance sheet. The latter is especially important because it makes iRobot an ideal acquisition target. This is a growing industry, and it’s definitely possible for a bigger player to step in and scoop up the technology. However, investing in a stock in hopes of the company being acquired can be an extremely frustrating experience. In simplest terms, there is a lot of waiting involved.

Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.

Assuming iRobot isn’t acquired, let’s take a look at its situation. How is this company likely to perform on its own?