iRobot Corporation (IRBT), Deckers Outdoor Corp (DECK): Highlights From the Jefferies 2013 Global Consumer Conference

Page 1 of 2

Jefferies is hosting its 2013 Global Consumer Conference on June 17 – 19 in Nantucket, MA. More than 60 companies are presenting across a variety of consumer-related sectors, including consumer finance, consumer products, restaurants, and retail & apparel.

As the broader market reaches multi-year highs, consumer-related stocks may have more room to run. The Consumer Discretionary SPDR (ETF) (NYSEARCA:XLY) has outperformed the S&P 500 year-to-date with a 20.6% gain, compared to only 15.7% for the S&P.

Recent data points support rising valuations as the consumer recovers to pre-crisis levels. The Thomson Reuters/University of Michigan consumer sentiment index reached a high of 84.5 in May 2013 before falling slightly to 82.7 in June. The May recording was the highest level since June 2007 — an impressive figure and a six year high.

We Fools are focused on identifying quality companies for the long-term. Here are two stories I uncovered at this year’s Jefferies conference that may benefit from a healthier consumer:

Technology-based consumer solutions

iRobot Corporation

Shares of iRobot Corporation (NASDAQ:IRBT) have more than doubled so far in 2013 as management has introduced new robots and raised its full-year sales and profit guidance.

iRobot Corporation (NASDAQ:IRBT) was founded in 1990 by researchers at the Massachusetts Institute of Technology with a vision of “making practical robots a reality.” Today, the former start-up has a $1 billion market capitalization and sales have grown to nearly $500 million annually.

The company has captured 10% of the $2.1 billion market for vacuum cleaners which cost over $200. Purchasing a vacuum cleaner with artificial intelligence is definitely a discretionary purchase, which is why iRobot Corporation (NASDAQ:IRBT) may grow sales with an improved consumer.

Chief financial officer Alison Dean spoke at the recent Jefferies conference. In addition to the consumer, iRobot is developing robots for health care, enterprise, and retail applications. For instance, the Brazilian government awarded iRobot Corporation (NASDAQ:IRBT) a $7.2 million contract earlier this year in preparation for the 2014 FIFA World Cup.

On a valuation basis, iRobot raised its full year profit outlook to $0.80–$1.00 on sales guidance of $485–$495 million. The stock is richly priced at 40x–45x price-to-earnings, however the share price becomes reasonable when considering other factors.

First, iRobot Corporation (NASDAQ:IRBT) has an extensive intellectual property (IP) portfolio which gives the valuation upside. Second, the company has blue-chip partners to grow sales, including Cisco Systems, Inc. (NASDAQ:CSCO) for enterprise applications, Honeywell International Inc. (NYSE:HON) for security applications, and InTouch Health for health care applications. Third, iRobot is a potential takeover candidate for an existing partner or a larger conglomerate.

Despite the rich valuation, I believe iRobot Corporation (NASDAQ:IRBT) will yield additional upside over the next 12 months.

Leading footwear designer

Deckers Outdoor Corp (NASDAQ:DECK) designs footwear for high performance outdoor activities and casual everyday use. The company operates under the UGG Australia, Teva, and Sanuk brand names.

Jefferies views Deckers Outdoor Corp (NASDAQ:DECK) as its #1 pick for 2013 — the investment bank has a $100 price target on the stock, nearly double the current market price.

CFO Tom George presented at the recent Jefferies consumer conference, highlighting UGG Australia growth in mens’, kids’, handbags & apparel. The company is planning to dramatically increase its retail business over the next two years. Deckers currently operates 78 stores worldwide and forecasts 200 stores under operation by 2015.

Management anticipates that sales will grow 5% for fiscal 2013, with profits expected to grow about 7%. The company maintains a calendar fiscal year.

Deckers Outdoor Corp (NASDAQ:DECK) is also viewed as a likely takeover candidate. When considering the math involved, Jefferies believes an external buyer would earn a high rate of return by acquiring Deckers through a leveraged buyout.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!