This investor loves robotics stock Ouster

Ryan Modesto, CEO and portfolio manager at i2i Capital Management, says Ouster (Ouster Stock Quote, Chart, News, Analysts, Financials NASDAQ:OUST) is well-positioned to benefit from long-term growth in robotics.

Speaking on BNN Bloomberg’s Market Call on March 5, Modesto said robotics remains a niche investment theme with relatively few pure-play companies that have established businesses.

“Ouster is one of the few companies that we think is really positioned to benefit from a surge in demand for robotics when that happens,” he said.

Ouster develops lidar sensors and vision systems used to help machines perceive their surroundings, a capability Modesto described as making the company “the eyes of robots.”

The company recently expanded its technology platform through an acquisition that broadens its capabilities into a more comprehensive vision solution for robotic systems.

“The more you look into the space and you realize what their sensors look like, the more you’ll notice robots with the Ouster lidar sensor on them,” Modesto said. “It’s real, it’s out there. Companies are testing and using that already.”

He acknowledged the company remains a higher-risk investment, noting it is still generating negative cash flow despite strong revenue growth.

“Their growth profile is about 30% year over year, and they expect to do this for the next four or five years,” Modesto said. “They’re cash-flow negative right now, but they also have a lot of cash on the balance sheet to fund their growth.”

Modesto also pointed to potential regulatory and geopolitical tailwinds. Ouster is among the few lidar providers approved by the U.S. government for use on drones, allowing systems to operate effectively regardless of lighting conditions.

He added that growing restrictions on foreign sensor technologies entering North America could further support the company’s market position.

“If you’re worried about certain companies or countries spying on you, you probably don’t want them to have lidar sensors all over the place,” Modesto said, adding that Ouster’s North American base could make it a preferred supplier.

Asked whether that could create a sole-source dynamic for some customers, Modesto agreed.

Shares of Ouster closed March 6 at US$20.20.

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