Midcap Stocks That Could Pop
Commercial landscaping (think: mowing golf courses and parks) is a booming industry in the US, but labor costs are high and margins are razor-thin. That is, until Graze Mowing brought their sophisticated, autonomous mowers into the picture.
With machine learning and computer vision, they’ve developed proprietary technology to mow lawns like nothing you’ve seen before. And they’re 100% electric-powered, so Graze can eliminate 75% of the fuel costs and over 50% of the labor costs associated with traditional lawn mowing. The best part: you can invest in them today.
With over 5M raised already, and 19M in pre-orders from leading country clubs landscapers, you can join the investors and entrepreneurs looking to reinvent commercial mowing.
Let’s start off by looking at the options market as of close Thursday. Here’s a summary from the Options Matrix :
The bubble size corresponds to the amount of total premium trades, while the color of each bubble represents the sentiment of options traded for each name. Green is bullish, red is bearish, and yellow is neutral.
While you probably can’t read the smallest bubbles on here, I wanted to point out the biggest players in the options market on Thursday. The most noteworthy is Tesla, which is returning to its position atop the options market that it held for much of 2020.
Tesla traded more in options than any other name, including indices like SPX. The scale of the Tesla options market is pretty amazing to see. Because of the increased interest in Tesla options, implied volatility is fairly high, but still much lower than it was for much of 2020.
Right now, the at-the-money calls expiring today have a 34% IV, which is actually fairly reasonable. The calls with strikes near 800 are in the 80% range.
Usually, it would be a bad idea to buy and hold calls on Tesla because of the IV. Even if you were correct in direction, you could lose because of high theta decay. However, I wouldn’t give this warning right now (theta decay is always a risk, but Tesla’s moderate IV levels don’t make me think that holding calls is definitely a bad idea).
Now let’s look at some under-the-radar companies with high option volume.
We know that Tesla, AMC, and GameStop have robust options markets, but are there any surprising small or midcap stocks with unusual option activity?
Within IWM (Russell 2000 small and midcap ETF), there are several names with high option volume.
GameStop and AMC dominate this list, but PLUG is a lesser known name that I’ve seen on this list a lot over the last few weeks.
Plug Power is up 18% over the last month but stumbled on Thursday. The bullish option activity, including high call premium and low put/call ratio, could indicate that there is still more upside.
MicroStrategy (MSTR) is another stock with high option activity. The company owns over 100,000 Bitcoin and effectively trades as a proxy for the cryptocurrency. Trading MSTR’s options could be a good way to bet on the price of Bitcoin if you don’t have a crypto brokerage account.
A stock on this list you might recognize is Bed Bath Beyond (BBBY), which has shown high option volume and a recent spike in price as it tends to move with AMC, GameStop, and other short squeeze stocks. Its put/call ratio of 0.25 is very low.
For more option flow data, be sure to check out the Options Matrix.
Looking to build up your dividend portfolio?
This article by Dividend Derek caught my eye. It’s a list of 13 stocks that will increase their dividend next week, including two “dividend kings”.
While you’ll have to read the article for the full list, one that caught my eye is Lennox International (LII). Its a 12.5 billion supplier of heating and air conditioning components based in the Dallas suburb of Richardson, Texas.
Lennox is up 46% over the last year and is boosting its dividend by 19.48% next week. The dividend bump will make the forward yield 1.13%.
Another one that interests me is Alexandria Real Estate Equities (ARE). ARE is a real estate investment trust that owns office buildings and laboratories and focuses on offering real estate to companies in the life science and tech industries.
ARE’s dividend will increase 2.75% to give it a forward yield of 2.37%.
Taking too little risk in your portfolio is like smoking cigarettes, taking too much risk is like doing heroin. Both will kill you, but it’s a question of how quickly.
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The way of the robot
From evolving technology to solving common concerns, autonomous mowing companies are aiming to transform the green industry.
With labor shortages only getting worse, along with states and local municipalities pushing to pass gas-powered equipment bans, the market for autonomous mowing is heating up.
There are a handful of companies far down the road in developing these machines, and Exmark is in the early stages of developing robotic and autonomous commercial mowers. With more and more autonomous mowing companies are popping up, what sets one robotic mower apart from another?
SEPARATING THE HERD
For Scythe Robotics, it was about constructing a machine that landscapers would be inherently familiar with.
“It’s a 52-inch, commercial grade, fully autonomous, all-electric mower,” says Billy Otteman, director of marketing for Scythe. “It’s tri-blade, rear discharge. Essentially it can see and respond to the environment around it, so you as a mower drive the perimeter of a property manually, as a ride on, and then you flip it into self-driving mode, and it starts laying stripes.
“Through the onboard sensing system, which is made up of eight HDR cameras and a slew of other advanced sensors, it’s able then to detect what’s going on in the environment and move and respond to different obstacles it encounters.”
Otteman adds that because they designed it to look like a stand-on mower, it should be more user-friendly.
“We want the crews to be able to step on and immediately know what to do,” he says. “The user interface is similar to a conventional mower, and we’ve been playing around with the hand controls to see what type will be easiest and most intuitive for people to use.”
Jarrett Herold, co-founder and COO of Electric Sheep, says it’s functionality that makes his mowers stand out.
“We started out with what a lot of the competitors are doing, which is open area auto-striping — you draw a perimeter or some shape that’s largely unobstructed — and the tech will auto-stripe the middle,” he says.
“We understood though, that wasn’t a technology that was going to unlock what we considered to be the 20 billion mowing market. So, we shifted our FOCUS to the technology we’re working with today, which we call ‘recorded replay.’ So, we give our mower to our customers, and they record exactly how they would like to mow a given area and we just replay that path into perpetuity.”
Husqvarna launched its first fully automatic lawn mower in 1995. Since then, the company has continued to evolve its autonomous mower fleet and has expanded the Automower line to include 15 models for both residential and commercial use, says Alex Trimboli, senior brand manager, robotics.
Husqvarna’s newest innovation is set to launch next spring and will be able to mow larger spaces. “Our next advancement in this category, launching in Spring of 2022, is CEORA, a revolutionary new autonomous solution for large green spaces,” Trimboli says.
“CEORA will utilize our satellite-based EPOS (Exact Positioning Operating System) technology to create virtual boundaries for easy and hassle-free operation.”
CEO of Graze, John Vlay, says the autonomous mowing company is unique due to its global reach, team of engineers and funding source.
Vlay says that since 2019, Graze has raised over 9.2 million in investments through crowdfunding and has over 6,000 investors. The company is also receiving international interest for its mowers.
“We’ve got preorders not only from the U.S., but 50 out of Australia, 70 out of the U.K. and a lot of interest from South Africa, South Korea and the Middle East,” Vlay says.
Because autonomous mowers come in all shapes and sizes, the building process is different among companies. Some opt to build the machine from scratch, while others build devices that are retrofitted onto existing mowers.
At Scythe, the mowers are built systemically to ensure excess safety.
“Our system is built from the ground up,” Otteman says. “Everything is intended to be operating in self-driving mode. So, with that, all of the sensors are securely and safely attached. Nothing will be able to fall off…by having that built from the ground up solution, the robot is able to perform better, create a better mow and produce a better-quality cut.”
In a time of never-ending supply chain issues, Vlay says being able to produce the mowers themselves has benefited Graze.
“From the very beginning, we talked about doing everything ourselves,” he says. “Doing all our mow decks, doing all of the hardware, doing all of the software…
“It gives us a much stronger patent. And it also allows us to control everything. So, we’re no longer beholden to a lawn mower manufacturer that may have orders for other customers. We’ll able to dictate what we’re making, and who we’re making it for.”
Husqvarna also chooses to handcraft its autonomous mowers.
“Each Husqvarna Automower is produced from scratch through a combination of human and robotic assembly in our Aycliffe, UK, factory,” Trimboli says.
However, Electric Sheep chooses to go in the opposite direction — at least for now.
Mowing The Lawn With A Cell Phone Controlled Robot Mower
“We have an approach that is a retrofit approach, where we’re clamping on to existing mowers, but we do want to FOCUS on a few platforms that are going to unlock a lot of opportunity for us,” Herold says.
Since its inception, Graze has gone through several versions of its robotic mower. The company started with solar panels before pursuing other electric technology that allowed for longer runtimes and less weight. Vlay says the technology they use is always evolving and the newest version is the most advanced yet.
“Each version has iterated more and more based on where we ultimately want to be,” he says. “On our third version, we’re utilizing lidar, which is used for object detection and object avoidance. That coupled with our GPS and sensors allows us to map the perimeters both exterior and interior to define the mow area and mow in parallel lines and set the direction we want to mow.”
The latest features for Husqvarna’s Automower line are all about improving customer experience, Trimboli says.
“Lift and Tilt sensors help prevent collision, the noise-reducing motor design keeps the Automower virtually silent and advanced theft protection puts owners at ease,” she says. “Additional features include automatic charging, easily adjustable cutting height and Bluetooth or cellular connectivity (depending on the model).”
What might be the biggest innovation for the mowers is Firmware Over the Air, or FOTA.
“This allows select automower software to automatically update their software wirelessly, instead of the requiring owners to take their automower to a dealer for updates,” Trimboli says.
Scythe utilizes an assortment of systems for its mowers, but one stands out as a game-changer, Otteman says.
“Computer visioning is our primary sensing technology,” he says. “There’s various different technologies our robot uses, but with the computer visioning, our robot is actually seeing the world and the machine is learning and looking at the world as we would and identifying pixel by pixel what the objects it sees are.”
In addition to the technology, Otteman says there are three things Scythe is always looking to improve — reliability, robustness and usability.
“Mowers need to be tough. The mowing industry really has it nailed down, but when we think about robotics and applying this robotic technology to an outdoor environment, they have to be as durable, or more, than conventional lawn mowers,” Otteman says.
To watch the webinar “Inside the world of robotic mowers,” hosted by Lawn Landscape editor Brian Horn with a panel of Logan Fahey, Jen Lemcke and Tony Hopp, visit bit.ly/lawnrobotic.
IT’S ALMOST SHOW TIME
While autonomous mowers are still relatively new in the United States, companies are preparing to sell their machines. To make sure the robots are performing correctly, many have chosen to partner with landscape contractors on a trial basis to test things out.
“We’re very much at the go-to market stage,” Herold says. “We are being very judicious on how we’re selecting the right sites with the right customers, so that we can deliver a strong ROI.
“This year, we shifted our operations over to a much heavier turf market, which is eastern Pennsylvania and New Jersey. We are deployed with five customers out there, and have 10 mowers across those five customers. Now we’re fundraising to fuel next year’s expansion,” he adds. Before taking on a slew of new customers, Herold says the company plans to ramp up production with its existing partners.
“We are very focused on deploying through next season with the customers we’ve already established,” he says. “Technology like this doesn’t really improve or get better in a garage somewhere — it needs to be out in the field and at customers’ sites.
“We need to be partnering with the folks that have done this stuff for decades and can help shape it into what it needs to be.”
Scythe, who’s been working with 17 pilot partners, opened for public reservations in October. “We will then use those reservations to gauge demand and plan production for the years ahead. Based off where we are today, 2022 production is already accounted for. Some of our pilot partners and existing customers have filled production for 2022,” Otteman says.
“So, we’re taking orders to be fulfilled in 2023 and beyond. It sounds like a long time, but there are a few things that are going to be happening as we ramp up production. We’ll be ensuring and securing the quality and safety of the product.”
Otteman adds that while it may be two years before customers receive their robots, they’ll need that time to prepare for the onboarding process.
“Our mowers are all-electric and while it’s a pretty easy switch in terms of what landscapers will need in their facilities, they will need to have enough power to charge all of the bots,” he says. “They will need to get all of these things in place.”
Graze is also still in the testing phase, but Vlay says he’s eyeing a rollout soon.
The FUTURE of Autonomous Mowing
“Right now, we’re doing a couple of pilots in California and we’re deploying mowers to landscape contractors in California,” he says.
“We’re going out every week and the objective is to get as many hours as we can under our belts and see what kind of issues come up that we need to troubleshoot. We’re expecting that to be through the end of this year.
“Depending on how those pilot programs go, will determine how quickly we go out to commercialization. My hope is early 2022,” Vlay adds.
For Husqvarna’s machines, contractors can order them through several avenues.
“You can order online from Husqvarna.com or visit one of our local Specialized Automower Dealers who are authorized to sell, install, and service your Automower,” Trimboli says. “Contractors can qualify for fleet discounts based on bulk purchases and other advanced fleet services.”
As these mowers become more available, and the technology advances, Otteman says the excitement within the green industry is growing.
“It’s great to see the eagerness and the excitement of the industry,” he says. “It’s an exciting opportunity because even though fulfillment might be further off than some customers would like, the excitement and momentum behind the autonomous mower movement is very strong.”
“In the future, the robot will be able to identify things like a broken sprinkler head, or a patch of grass that looks brown, and then it can ping the business to send someone out to speak to the property owner. There are all kinds of opportunities that unlock when you have the ability to collect, analyze and act upon this type of data.” — BILLY OTTEMAN, DIRECTOR OF MARKETING FOR SCYTHE
Herold says he hopes the mowers are impressive enough to get even the most “old-school” contractors on board.
“The folks that we’re really excited to work with are those that are willing to challenge their way of thinking,” he says.
“With a lot of experience comes some baggage in the way you do things, and the companies that are willing to challenge how they think of their mowing operations, and their businesses as a whole, will be the ones to take full advantage of this.
“I think they all knew something like this would happen and the technology was arriving…everyone was sitting and waiting for something in this category to arrive to commercial landscaping,” Herold adds. “For a lot of commercial contractors, the Roomba-style mowers just weren’t it in their minds.”
By utilizing autonomous mowers, Otteman says landscape companies’ opportunities for growth are unlimited.
“In terms of what it can do for landscapers, we’re most excited about the ability to multiply what landscapers can do with the crews they already have today,” he says.
“So, the labor crisis and labor pressures are top of mind…they can really expand the productivity of their teams.”
All the data the machines can collect including things like mow time, fleet deployment, mapping capabilities and more, can provide additional selling potential.
“You also have upsell opportunities,” Otteman says. “In the future, the robot will be able to identify things like a broken sprinkler head, or a patch of grass that looks brown, and then it can ping the business to send someone out to speak to the property owner.
“There are all kinds of opportunities that unlock when you have the ability to collect, analyze and act upon this type of data.”
Investing in robotic mowers can aid in efficiency.
CUB CADET PRO SERIES PRO Z 960 S AND 972 S SUREPATH
The pitch: Cub Cadet’s first semi-autonomous commercial mowers are outfitted with GPS technology and an exclusive four-wheel steering system to deliver the most efficient cut possible.
- The operator simply sets the preliminary cut line, and the PRO Z SurePath units will perform straight cutting paths with an auto-zero-turn at the end of each pass with the touch of a button.
- By utilizing high-precision GPS technology, SurePath Auto Steer reduces overlap and cuts perfect stripes, allowing the operator to complete a property in less time while producing superior cut quality.
- Cub Cadet PRO Series PRO Z 960 S and 972 S SurePath units will be available at select dealers starting in Spring 2022.
For more info: cubcadet.com
The pitch: The commercial-grade optimow mowers include four models: optimow 33, optimow 33H, optimow 66 and optimow 66H.
- The optimow mower is equipped with 4G cellular connectivity and fully integrated GPS tracking, allowing operators to operate from anywhere.
- Optimow robotic mowers can be customized for everything from scheduling to cut height and can operate on lawns with up to a 35% grade slope.
- The optimow 33 and 33H models can cut up to 1/3 acre on a full charge, while the 66 and 66H models can cut up to 2/3 acre on a full charge. The optimow 33 and 66 models have a cut height from 0.8 inches to 2.4 inches, while the 33H and 66H cut heights range from 2.4 inches to 4 inches.
The pitch: The CEORA is a commercial robotic mowing solution, coming in 2022, that will cover more than 12 acres with one mow.
- The CEORA utilizes the company’s satellite-based EPOS (Exact Positioning Operating System) technology to create virtual boundaries.
- Designed to be a low cost, low noise, zero emissions solution that will allow facility management companies, municipalities and sports field managers to bring more efficiency and consistency to the overall land maintenance process.
- Mowers with EPOS integrate with Husqvarna Fleet Services, a digital fleet management control system, and make the management of large lawns and green spaces easier.
For more info: Husqvarna.com/uk
Echo ROBOTICS TM-2000 AUTONOMOUS TURF MOWER
The pitch: The Echo Robotics TM-2000 autonomous turf mower features five floating cutting heads and an adjustable mowing height of ¾ to 4 inches.
- It can cut up to six acres for turf that looks manicured and professional all season long.
- The autonomous mower is self-charging with a working cycle of two hours mowing to one hour of charge time.
- With remote command and performance monitoring via a web platform and mobile app, fleet management is easier — giving users more time to FOCUS on other parts of their business.
For more info: echorobotics.com
ELECTRIC SHEEP DEXTER MEGA
The pitch: This machine allows commercial lawn mowers to drive themselves.
- With its “recorded replay” technology, operators record how they want the property mowed once while operating the machine, and then it replays the exact pattern autonomously each time.
- The Electric Sheep Robot works with commercial gas and electric mowers and is available through a Robots-as-a-Service model.
- A limited quality will be available in 2022.
GRAZE – AUTONOMOUS COMMERCIAL LAWNMOWER
The pitch: A fully autonomous and electric commercial lawn mower that is controlled via GPS, Lidar and Smart sensors to streamline efficiency in commercial landscaping.
- Machine learning allows the mower to map jobsites, plan and execute mowing paths, while avoiding obstacles and dangerous inclines.
- Powered completely by electrically charged batteries, operators can cut fuel costs and eliminate carbon emissions while also maximizing revenue by addressing labor challenges. The mower can run for 7-8 hours before needing a recharge.
- The mower has a 60-inch mow deck which allows it to fit in a conventional trailer while big enough to mow over three acres per hour and its run flat tires are airless thus eliminating manual checking of air pressure and inflating.
For more info: www.grazemowing.com
RC MOWERS REMOTE-OPERATED ROBOTIC MOWERS: TK-60XP, TK-52XP AND TK-44E
The pitch: RC Mowers remote-operated robotic mowers are for mowing steep slopes and other hazardous terrain.
- Mowers are designed to maintain steep slopes up to 50 degrees.
- The TK-60XP and TK-52XP machines cuts brush up to 1.5 inches.
- All the mowers are 100% manufactured and serviced in the U.S. They offer a 30-day buy-back guarantee and come with a 72-hour parts shipping guarantee.
For more info: www.rcmowersusa.com
The pitch: The 52-inch fully autonomous commercial mower with eight HDR cameras and advanced sensors to identify obstacles on a property and safely navigate around them.
- The M.52 follows contours, tackles slopes and automatically adjusts striping patterns on its own.
- The all-electric mower can be charged overnight and run all day with zero emissions and substantially less noise than gas-powered mowers.
- With 2022 production already reserved, 2023 reservations are available.
For more info: scytherobotics.com
STIHL iMOW RMI 632 PC-L
The pitch: STIHL iMOW RMI 632 PC-L allows homeowners and professionals to mow yards, track progress and customize mowing schedules from the convenience of their smartphone.
- Features an 11-inch cutting width that efficiently mows yards up to nearly an acre and a fourth in about 50 hours per week.
- Removable LED control panel with bright display offers easy programming without having to bend down to reach the controls.
- Able to traverse slopes up to 24 degrees for clean and even mowing.
For more info: STIHLusa.com
Not just a paycheck
Explore the January 2022 Issue
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