Can Robotic Companies Keep Soaring In 2014?

Dec.27.13 | About: Adept Technology, (ADEP)

With 2013 coming to an end, can robotic companies keep up their impressive gains? Shares of top robotic companies in 2013 have had inhumane like gains. I'm convinced these gains will continue right on through 2014. As we become an even more technologically advanced and diverse global economy, the dependence certain companies have on robotic devices to speed up their manufacturing and processing only increases. In 2013, this dependence seemed to increase quite dramatically. Behemoths Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN) have both spent billions acquiring numerous robotic companies in the last couple years. Amazon bought robotic manufacturer Kiva Systems in 2012 for approximately $775 million. Most recently, On December 16th, Google made a purchase of Boston Dynamics, an engineering company that has designed mobile research robots for the Pentagon. This acquisition awoke investors and helped them realize the potential that any robotic company has of being bought out by the likes of Google or Amazon.

So what's in store for 2014? Colin Angle, the CEO at iRobot (NASDAQ:IRBT), was not afraid to share his robust thoughts on his own robotic company. He went on record saying "I think it's going to be a great growth year for us," he added that iRobot, "is expecting mid to high teen revenue growth in 2014." These comments rallied investors and subsequently shares of iRobot. Shares of iRobot exploded 15% in the same trading day as the announcement. From the beginning of 2013, iRobot's stock has risen over $15 per share and according to the CEO, the gains and rewards for shareholders are only going to continue.

Some smaller robotic companies have followed almost directly in the footsteps of iRobot. Adept Technology Inc. (NASDAQ:ADEP) has had one of the most marvelous runs in the NASDAQ year to date. From the beginning of 2013, Adept's stock has risen over $12 per share. This really becomes even more amazing when you find out that it began the year at only $2.60 per share. The growth in this stock has been almost unreal, gaining essentially 500%. Adept is still a very attractive buy option, as its market cap is only a measly $160 million. To make matters better, the company has absolutely no debt, $7 million in cash reserves, and has been awarded several big contracts this year alone. Most recently, Adept was awarded a big-time contract with Harpak-ULMA. "Adept has developed a host of hardware and software products for use in a food packaging environment. The company's "Quattro s650HS" is the only high-speed parallel robot to receive USDA acceptance for meat and poultry processing." Due to Adept's favorable financial positions, unique FDA approvals, and recent awarded contracts, the potential for Adept to keep on going with its uncanny growth story is essentially limitless.

Even more important than the hype and recent performance of iRobot and Adept Technology are the financials and future prospects of these two robotic companies. On November 7th, Adept reported earnings for the first quarter of 2014. The revenue at Adept Technology increased 19.4% as compared with the first quarter of 2013 and was flat with the fourth quarter of 2013. Revenue being flat on a fourth quarter 2013 to a first quarter 2014 basis is a much better figure then it seems, due to the fact that the first quarter is typically slower than the other quarters because of seasonal trends in the business. In addition to the solid revenue growth, gross margin increased nearly 5% and operating loss improved by $2.5 million from a year-over-year basis. Adept reported an operating loss of $200,000 or $0.05 per share which was an improvement of $0.24 per share or nearly 500%. Investors who are looking forward to next quarter's earnings report will most likely see even stronger numbers. There is no reason why Adept's new contracts and partnerships would not help to grow both revenue and earnings per share.

While Adept seems to be turning around its business to a future of consistent profitability and growth, iRobot has made a habit out of delivering both profits and growth. When iRobot announced earnings for the third quarter of 2013 its earnings didn't disappoint. On a 9 month comparison between 2012 and 2013, there was some serious growth. For the first 9 months of 2013, income increased $1.2 million to $24.5 million. Additionally, revenue for the first 9 months increased $25.5 million to $361.1 million. Home Robot, arguably iRobot's most prolific segment of its business, increased 16% driven by strong demand in Japan. Starting in early 2014, iRobot will roll out its much anticipated "Roomate880." The plan is to steadily increase its distribution points and iRobot has mentioned the possibility for distribution to begin at Costco (NASDAQ:COST). The "880" is by no means a cheap device, as prices start around $700. However, if iRobot can manage to sell enough "880s," shareholders should be poised for even further future growth.

Who knew that robotic companies could have provided shareholders with such monstrous gains in 2013? If 2014 proves to be anything like this past year for iRobot and Adept Technology, then you would be a real fool to not get in on the madness while you still can. With Google and Amazon seemingly snatching up a new robotic company on a monthly basis, you may be as smart as a robot if you decide to invest in robotic companies in 2014.

Disclosure: I am long ADEP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.