3D Systems (DDD) seems like an ideal stock for a speculator looking to make some quick cash. In the past 52 weeks, it's gained just over 260%. It's one of the hottest stocks in the hottest industries. Unfortunately, this kind of reputation for a stock is not always a good thing. To realize this, all you have to do is think back to the dot-com boom of the 90s.
Overall, 3D Systems has experienced the rapid gains as a result of being in the right place at the right time. When magazines started publishing articles about 3D printing and news stations started reporting about it, people looked to a few companies, primarily 3D Systems, to lead the industry. In reality, though, we can see that the 3D printing industry is still young. Yes, 3D Systems has started out on top, and I'm not proposing that someone will take their spot, but investors have to consider the company's situation. Multiple other companies, such as Stratasys (SSYS), have a realistic shot at stealing the crown. In fact, many people believe that with Stratasys' merger with Objet, they already have. Considering this, it seems as if it's a little bit of a gamble to have such confidence in 3D Systems.
More importantly, investors haven't been shy in showing their confidence, as seen by the stock's explosive growth. But, considering the ambiguity of the industry, was this growth really justified? Regardless of whether or not it is, multiple valuation numbers indicate that 3D Systems is at least slightly overvalued. It's trading at just over 100 times earnings, its price/sales ratio is 12.34, and the price/book is 9.54. Also, the short interest as a percentage of the float is 42.10%, showing that many investors have already caught on to the possible tumble for the stock in the near future.
A Different Story
In the business of quick casual restaurants, Panera Bread is climbing its way to the top. Established in 1981, the chain now has 1,625 restaurants in the 44 states and in Ontario, Canada.
You do not have to look far to see the customer satisfaction that Panera provides. Simply log onto a social media site such as Twitter or Instagram and you can see that there are a myriad of people who love Panera, and they love to tell others about it. And this is for good reason. The company has won a number of awards. Most recently, in the 2012 Harris Poll EquiTrend, Panera was named the Casual Dining Brand of the Year. It has built a strong brand off of its wonderful atmosphere, which has made it a place that people love to flock to when they want to relax and enjoy a good meal.
Financially, Panera is in great shape. It has 289.88M cash on hand, and no debt. As of September 25, 2012 the earnings growth year-over-year has been 26.60%. It is trading at just under 30 times earnings, has a price/sales of 2.21 and price/book of 5.77. Growth estimates for the next five years (per annum) are at 19.25%. Clearly, Panera is making a mark on its industry and looks as if it will continue the rise to prominence in the coming years.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.