iRobot (IRBT): Vacuums to defense

"For a pure play in automated and remotely controlled vehicles, consider iRobot (NASDAQ: IRBT)," says Jim Powell in his latest Global Changes & Opportunities Report.

"The company is best known for its Roomba vacuum cleaners that wander around the house bumping into everything and setting off security alarms.

"A similar product cleans the surface of swimming pools. iRobot also makes automated mail and product delivery carts for businesses.

"iRobot’s most promising devices are designed for police and military uses. The company sells small tracked vehicles that can enter buildings and search for people and explosives.

"Other mechanical creepers identify and detonate roadside bombs (IEDs), sort potentially dangerous packages, and so on.

"The company’s technology is especially profitable because it can be scaled up or down in size and equipped to perform a wide variety of tasks.

"PackBots, for example, can be made to carry everything from Krispy Kreme donuts to canisters of nerve gas. It’s all possible because each type of vehicle uses the same software and controllers.

"iRobot is now making alliances with other companies to jointly develop products. Agreements have been signed with Boeing, Advanced Scientific Concepts, TASER International, Deere, and SAIC – to name only a few. I think each project will lead to several new robotic devices.

"iRobot is profitable. Nevertheless, the company is much smaller than our other defense contractors, its P/E ratio is high3, and it must be considered a speculation.

"However, I think this company’s potential makes the risk worthwhile. Further, the P/E ratio is not out of line for a small company that recently started to earn a profit."