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.

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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?