Androids and paybacks and tigers, oh my! The last few days have seen a flurry of activity on the markets, as first:

  • Google (NASDAQ:GOOG) declared war on Apple and the iPhone, declaring its intent to market a phone of its own. Or did it? Debate continues on whether Google plans on launching its own phone, or whether it'll stick to mobile phone software.
  • Then Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) declared independence from government bailouts
  • And finally, just yesterday, we learned that the "Tiger" – ExxonMobil (NYSE:XOM) – is looking for its next meal, and actually eager at the prospect of getting gas.

By comparison, the defense markets have gone suddenly silent. Oh, there was the odd multimillion-dollar contract reported last week, as Lockheed Martin (NYSE:LMT) notched an $850 million victory on a contract to build Trident II ICBMs for the Navy, and Oshkosh booked another 400 or so M-ATV contracts (another $175 million for the Wisconsin truckmaker. Ho-hum.) But aside from that, it was pretty much quiet here on the Western Front ...

Run silent, run deep
... at least on the surface. Underneath the lack of news, however, we're seeing our Defense Portfolio surge back into competition, racking up big gains, and fast closing the gap that had opened up between it and the rest of the S&P 500 in recent months:

Company

Starting Price*

Recent Price

Total Return

General Dynamics

$51.24

$69.01

34.7%

Raytheon (NYSE:RTN)

$41.99

$52.74

25.6%

Lockheed Martin

$77.07

$76.78

(0.4%)

AeroVironment

$29.96

$29.52

(1.5%)

iRobot (NASDAQ:IRBT)

$11.49

$16.64

44.8%

Force Protection

$4.57

$5.39

17.9%

AVERAGE RETURN

 

 

20.2%

S&P Spyder

$87.75

$111.11

26.6%

DIFFERENCE

 

 

(6.4)

Source: Yahoo! Finance.
*Tracking began on July 10, 2009. Portfolio is equal-weighted, with "recent price" being set at market close on the Friday preceding publication, and adjusted for stock splits and dividends.

It's quiet -- too quiet
While our stocks' resurgence is gratifying, the lack of actual "news" items does leave me with the question of what to talk about for the rest of this column. Shall we discuss the prospects for EADS' new A400M military transport, now that it's run a successful test flight? (Been there, done that.)

How about last week's Pentagon pronouncement that it's interested in funding development of a new long-range bomber? (Likewise. We knew that already.)

This week, I want to delve instead into something less noticed by the mainstream media. Take another look at that chart up above. See anything surprising?

In the midst of the Great Recession, a company that made its name selling novelty robotic vacuums is up nearly 45% in less than six months' time. So what exactly is the deal with iRobot?

Defusing the inventory time bomb, vacuuming up cash
I discussed recent goings-on at iRobot back in October, just after its Q3 earnings. In quarters past, iRobot had fallen into the habit of building more robots than it could sell (spiking inventories). In the process, it tied up cash in those inventories, which could have been put to more profitable use. Enter new CFO John Leahy.

A little more than a year ago, Mr. Leahy disavowed the stockpiling of robot parts as a "required" part of growing the business, and declared his intention to "improve working capital management." One year later, we're seeing Leahy's promise fulfilled. iRobot now sits atop a cash pile $63 million high. It generated $21 million in free cash flow over the first nine months of this year, and it's now heading full-steam into its most important quarter – the Christmas shopping season, where you can bet it's planning to vacuum up even more cash.

Foolish takeaway
How successful iRobot is at this task will determine whether the company can hold onto, and even add to, the gains it's posted over the last five months. But the company's performance already shows us why you shouldn't give up on a stock, even in the face of short-term stock underperformance, so long as your buy thesis remains intact.

Ours is. iRobot's is. Never surrender.

Fool contributor Rich Smith likes a lot of these stocks so much that he "bought the company" -- Force Protection, Boeing, and AeroVironment, to name a few. Google, AeroVironment, and iRobot are Motley Fool Rule Breakers picks. General Dynamics is a Motley Fool Inside Value selection. Apple is a Motley Fool Stock Advisor selection. Why do we tell you this? Because The Motley Fool has a bulletproof disclosure policy.