Topic: Wealth Management

Three uneven competitors in the rising robotics industry

Investment Counsellor

Every Monday we feature “A Stock to Sell” as our daily post. With every stock or investment we recommend as a sell, we give you a full explanation of why we advise against investing in it at this time.

A recent question on “robotics stocks for aggressive investing” from a member of our Inner Circle led to this examination of three different companies involved in this growing field. One is a sell, one is a hold and one is a buy.

ReWalk Robotics (symbol RWLK on Nasdaq; www.rewalk.com) is an Israeli company that makes robotic exoskeletons for helping people with spinal cord injuries walk again. The FDA cleared this technology for use in the U.S. in June 2014. It has been marketed in Europe since 2012.

ReWalk was formerly known as Argo Medical Technologies. It first sold shares to the public for $12 each in September 2014.

The company’s ReWalk Personal device is a custom-fit exoskeleton that can be worn at home and work. Hospitals and clinics use its other product, ReWalk Rehabilitation, for therapy.

ReWalk had revenue of $1.5 million in the three months ended September 30, 2014. It lost $3.5 million in the quarter.

We don’t recommend ReWalk at this stage of its development. If you own the shares, we believe you should sell them.


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Stock advice: Robots that wash and vacuum floors are main products for iRobot

iRobot (symbol IRBT on Nasdaq; www.irobot.com), makes and sells robots, such as the Roomba floor-vacuuming machine and the Scooba floor-washing robot, for consumers. It also makes the PackBot military robot.

The company gets about 88% of its revenue from home robots and 12% from defence and security.

iRobot spends a high 13% of its sales on research. That’s letting it come up with new robots, including the recently introduced RP-VITA for use in hospitals. This robot can be remotely controlled with a tablet. It uses sensors to find its way to a given patient and onboard cameras and displays for face-to-face interaction with doctors.

The stock trades at 22.3 times this year’s forecast earnings of $1.45 a share.

We view iRobot as a hold, but for aggressive investors only.

Note that Google (symbols GOOG (class C non-voting) and GOOGL (class A voting) on Nasdaq; www.google.com) continues to work on a number of robotics projects and acquire many small robotics firms.

The company is focusing on robots that can operate outside of factories and other structured environments. Instead, they will base their movements on sensors and data algorithms. The driverless car is a good example.

Google investors should hold their class A shares, but we recommend the cheaper class C shares for new buying.

Google is a buy.

Coming up Next

Tomorrow we look at why food isn’t the only big seller at one of Canada’s major grocery chains.

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