By most reasonable scientific accounts, the destruction of modern civilization and the rise of an advanced, sentient robot monarchy is at least a decade away. That leaves humans with a nice little window to seek out viable investments and prepare for the grim, metallic future.
All kidding aside, the rise of robotics is underway, and now could be a great time to invest in a potentially revolutionary technology trend. Read on to learn how iRobot (NASDAQ: IRBT), Amazon.com (NASDAQ:AMZN), and Intuitive Surgical (NASDAQ:ISRG) are shaping and benefiting from this transformative tech.
iRobot is the best-known company in the consumer robotics space, and its popular Roomba vacuum bots propelled a 24% revenue increase in the last fiscal year. iRobot has a market cap of approximately $970 million and expects sales of between $625 million and $635 million in the current fiscal year. Hitting the low end of that target would represent roughly 12% sales growth over the last fiscal year. The company has a forward P/E ratio of about 25, while the S&P 500's forward P/E ratio sits at roughly 18, so iRobot's valuation doesn't look too unreasonable given its growth potential.
iRobot will face increased competition in cleaning robots from Dyson, but the company is moving toward a more diverse product line that could help it weather new rivals in this market. The company's recently announced lawn mower robots have big potential, and its telepresence robots might yet find adoption for medical and conference purposes.
iRobot also has the potential to benefit from increased uptake in Internet of Things technologies and advances in analytics. Advances in IoT connectivity should allow the company's devices to utilize visual data from technologies such as home security systems, as well as uploading data for improved environmental navigation. Improved analytics should also pave the way for machine learning in iRobot's devices, enabling them to handle more complex tasks and minimizing the need for human adjustment. The takeover of the world's military bases comes later.
Amazon doesn't manufacture any products in the consumer robotics space, but automatons already play a big role in the company's operations, and their importance will only grow with time. Amazon has been buying up robotics assets that have the potential to create big wins for the company. In 2012, Amazon purchased Kiva Systems for $775 million, and the company's bots have already had a big impact in warehouses, handling merchandise transportation and even heading to recharging stations when they're low on power. Amazon employs more than 50,000 workers across its warehouses, and employee compensation is one of the company's top business expenses. Replacing human workers with robots could drastically improve the company's margins and limit expansion costs.
Amazon is also eyeing a future in which aerial drones play a significant role in order delivery, and after a bit of waffling from the Federal Aviation Administration, it looks like the company will get its wish. The first FAA-approved drone delivery is set to take place this month, and Amazon's drone program is on track to launch next year. The flying robots will reportedly enable the company to deliver orders within 30 minutes of the sale's completion, provided the destination is close to the warehouse.
Intuitive Surgical is one of the leaders in healthcare robotics, and a company to watch because its technologies have the potential to deliver substantial improvements for patients. Intuitive's da Vinci surgical robots enable high-precision, minimally invasive cuts, which can minimize scarring and shorten recovery times. Intuitive has a market cap of roughly $18 billion, and a forward P/E value of about 36, or roughly double the forward P/E estimate for the S&P 500. Shares have gained roughly 938% over the last decade, and the company's current valuation indicates healthy and sustained growth. Plus, Intuitive Surgical's unique position and technologies could position it to deliver.
Intuitive's da Vinci bots have helped doctors perform more than 1 million surgeries since their introduction in 2000, and it appears demand for the devices will continue to grow. In its last quarterly report, the robot maker announced that operations conducted with the device had increased 13% year over year, and quarterly sales of da Vinci surgical systems rose by roughly 14% to 99 units. Patients are reportedly warming to the idea of robot-assisted surgeries, and advances in technology and new product releases should continue to drive sales.
The entrance of more technologically entrenched, resource-rich competitors stands as the primary threat to Intuitive's business, and there's a very real development on that end. Google has announced a partnership with Johnson & Johnson for the creation of surgical bots, with a heavy analytics emphasis. The looming entrance of these giants isn't a surefire sign that Intuitive cannot deliver wins for investors, but it's certainly worth monitoring and consideration.
Keith Noonan has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Google (A shares), Google (C shares), Intuitive Surgical, iRobot, and Johnson & Johnson. The Motley Fool owns shares of Amazon.com, Google (A shares), Google (C shares), and iRobot. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.