Having a Roomba has been a simple pleasure. Roomba is a robotic vacuum for your home so you can golf instead of vacuum. iRobot (IRBT) is the parent company.
The company has an interesting chart this week. After spending two years in a subtle downtrend, IRBT recently started perking up. The SCTR (small cap) ranking topped 75 in December, recently pulled back and now seems to be resuming its outperformance.
The price made the highest weekly close in 16 months and the MACD shows the momentum at 2-year highs. There are some intra-week resistance levels at $38, but this might be the breakout where Roomba goes from a novelty in early-adopter homes (6%) to the really big deal. That would seem to fit with a product adoption model.
If you like doing the Peter Lynch style of investing, by buying what you like to use, this one fits my life.
The key ingredients to Lynch’s 10-baggers are attributes such as high returns on capital, ample reinvestment opportunities and a long runway thru either unit growth or price increases. A durable competitive position along with shareholder-friendly management often provide tailwinds to these 10-baggers.
Does this company have those things? You'll have to make your own mind up on that one.
The vacuum is truly a wonderful device, cleaning while you are not home. I noticed they also have a new floor mop and an eavestrough cleaner. Apparently the floor mop is for tile and hardwood mostly, but the company is targeting the Asian cleaning style. Who knows, that floor mop might help get the kids mopping the floors regularly.
That eavestrough cleaner is one I like. Living in old neighborhoods, the gutters are always clogging with leaves, pine cones, and asphalt from the shingles. If my family is reading this, Father's Day is in June!
That's about as close as I get to fundamental analysis. At this point in time, investors like it more than they have since 2014.
Good trading,
Greg Schnell, CMT
