A Robot looking at the camera: will AI be the next growth industry?
Market Analysis

Should I Invest In These 2 Top Robotics Stocks?

Robotics is a space with huge potential growth — here are 2 innovators worthy of investing in.

The global robotics market was valued at $39.72 billion in 2019 and has been forecasted to grow at a huge 25.4% Compound Annual Growth Rate (CAGR) until 2025, making the space a hot topic for investors looking to see impressive returns. Here are two companies you should consider.

iRobot: Bull vs Bear

iRobot (NASDAQ: IRBT) is a $3 billion company that designs and builds consumer robots — namely automated vacuum and mops for households. The business had an impressive 2020, with its stock growing 59%. The company has acknowledged how consumer attitudes within the space have changed. The concept of having an automated robot doing household chores has become more accepted, but the business still continues to innovate and further develop its high-end products, making it a consumer robotics market leader. 

iRobot is determined to stay at the top, spending almost $160 million on research and development in 2020 alone, and this company mindset is attractive when it comes to long-term investing. iRobot has been constantly upgrading features on its existing products, with its latest Roombas being equipped with advanced three-stage cleaning, personalized cleaning routines, and self-emptying features. 

Full-year 2020 revenue for iRobot rose to $1.43 billion, an 18% increase over the previous year. Q4 2020 was a high-expansion quarter with the company seeing 27% international growth with U.S. growth rising 28%, Japanese growth rising 39%, and EMEA growth at 26%. The pandemic boosted iRobot’s higher-margins e-commerce segment with direct-to-consumer revenue rising 114%. 

As for the company’s bear case, there have been some short-term worries. The business saw a 25% tariff on all of its products due to the U.S.-China trade war, with an expected full-year cost of around $42 million for iRobot. It has fought back by increasing production in Malaysia. iRobot also suffers from some near-term uncertainty as the aftermath of the pandemic might hit consumer spending, which could see sales slump in 2021. 

Raytheon Technologies: Bull vs Bear

Raytheon (NYSE: RTX) is a technology and innovation leader specializing in robotics, defense, aerospace, civil government, and cybersecurity solutions. Raytheon has recently been working with robotics to find innovative ways to assist soldiers fighting on the ground with autonomous aircraft such as drones. 

The company saw its share price cut in half at the start of 2020, mostly due to its high stakes in the crippled aviation industry, but its share price is beginning to recover. Raytheon has been investing heavily in robotics and luckily it has its substantial defense industry exposure keeping it afloat and softening the blow to its commercial aerospace segment. Raytheon’s share price is a bargain right now compared to pre-pandemic, and as the aviation industry is expected to begin to recover, so should Raytheon. Whilst we could be waiting some time for the stock to fully recover, investors still benefit from a 2.9% dividend. 

Raytheon had a tough 2020, with sales topping $16.4 billion and adjusted Earnings Per Share (EPS) reaching $0.74. The company is banking on the aviation industry to come back strong, forecasting sales to almost quadruple in 2021 to around $64 billion and an adjusted EPS of around $3.55. If this pulls off, it would make Raytheon a great investment. The obvious bear case here is that if the reopening of the global economy and aviation industry does not go to plan, we may see another difficult year for Raytheon. 

A MyWallSt subscription gives you access to over 100 market-beating stock picks and the research to back them up. Our analyst team post daily insights, subscriber-only podcasts and the headlines that move the market. Get your free trial now!   

MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here

Adam Barry
Adam loves innovative SaaS tech companies; in particular ones that give people the freedom to make money or start a side hustle, like Etsy, Fiverr and Shopify.