Headbobble.com will custom build a bobblehead doll in your likeness with color 3DPrinting!
“3DPrinting is hyped, but mainstream and growing. “
But where to turn to invest in this new phenomena?
Formlabs and Makerbot, the companies featured in the video, are not publicly traded… companies that are include 3D Systems (NYSE: DDD) and Stratasys (NASDAQ: SSYS).
They build the printers, develop the materials and write the software for both commercial and personal use. Both are considered leaders in the 3DPrinting industry. Both are similar in size (DDD is $2 billion market cap, SSYS is $1.3 billion) and valuation (the PE for DDD is 62, SSYS is 70). Both are coming off recent declines in their stock prices of about 20%. No question both companies bear the burden of high expectations for steadily improving earnings and game changing technology. I think they both are up to the challenge.
DDD reports steadily increasing earnings from operations with a 50% quarterly revenue growth yoy. DDD recently acquired Bespoke Innovations, a company that 3D manufactures custom prosthetic limbs for amputees. The Dutch firm TIM was acquired this past month. TIM is a full service, on demand 3D manufacturer of custom parts in Europe. Just announced is the acquisition of Rapidform of South Korea, a 3D scanning, reverse engineering and inspection firm. Rapidform is expected to add six to nine cents a share to DDD’s earnings, a 10% boost. Additionally, DDD has joined with the Smithsonian Institute to make 3D printed replicas of the Institute’s collection of artifacts.
SSYS isn’t sitting down on the job, either. Their big move is merging with Objet Printing, an Israeli company that has supplied 3DPrinters to Israel Aerospace Industries. This merger combines SSYS’s manufacturing capabilities with Objet’s rapid prototyping expertise into one firm – a potent combination. This should add to SSYS’s record earnings reported last August. NASA is using SSYS 3DPrinters to design complex parts for its next Mars rover. Piper Aircraft has recently turned to the Fortus 3D Printer to help it build its new Altaire single engine jet. Turns out, Piper can design specialized tools and parts in two thirds less time than traditional methods. And we all know, time is money.
Another 3DPrinting player is Autodesk (NASDAQ: ADSK), a firm that develops the software to design a product and relies on partner companies to actually print the thing out. ADSK is a leader in 3D design and engineering in a wide variety of industries. The Autodesk 123D 3D printing software is free and generally elicits favorable reviews. For example, an Apple iPhone or iPad user can take pictures of some thing, upload the images to the ADSK cloud, and voila, a 3D model is made. The software allows the user to touch up the model before actually printing it. The company, as an investment though, isn’t performing like DDD or SSYS.
As the above graph from Yahoo! Finance illustrates, ADSK has increased in share price in the past year, but has been outgunned by both DDD and SSYS. ADSK has acquired other firms to boost its presence in cloud computing and CAD. However, its 2Q earnings announcement in August disappointed and company guidance didn’t generate much excitement. ADSK reports that 72% of its net revenue comes from foreign countries. Perhaps the economic slowdown in Europe and Asia contributes to less than great expectations.
3DPrinting is a viable, growing technology. In August, 2011, Forbes quoted The Wohler’s Report that projected 3DPrinting growing from a $1.3 billion industry in 2010 to a $5.2 billion industry in 2020. Commercial applications prove 3D designed and printed parts can be made faster and cheaper than traditional manufacturing methods. I believe DDD and SSYS represent the best opportunities. There will be bumps on the way for these two companies. Given their current presence, patented technology and aggressive acquisitions, I believe investors would do well to invest in this part of the future.
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