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Active investor and trader since my teens, mostly in high tech stocks who successfully navigated the treacherous Chinese small cap market. I now focus my investment research and dollars on 3D printing companies exclusively and manage what is considered to be the Internet's largest and most... More
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  • Cimatron (CIMT) Record Earnings, Trailing PE Of 16, Now Entering 3D Printing Software Sales

    This past weekend a widely-circulated Barron's article, Beware 3-D Printing!, (subscription required) suggests the best 3D printing investments now are those that are adding 3D printing software sales to their revenue mix.

    With a trailing PE of 16, record net income recently reported for 2013, and 3D printing software sales to begin this year, Cimatron (CIMT) is a stock 3D printing investors should take a close look at as an investment in the space.

    Overview/Share Structure

    Cimatron develops and distributes CAD/CAM software for the manufacturing industry and is ranked among the top ten CAD/CAM suppliers in every global region. The company has subsidiaries in Asia, North America and Europe, and works with certified independent service providers in over 40 countries worldwide. Cimatron was founded in 1982 and is based in Israel.

    CIMT has 9.3 million shares issued & outstanding, a healthy 35% institutional ownership level, and a market capitalization of $83 million as of 3/11/2014.

    Current Product Lines

    1. CimatronE, an integrated CAD/CAM solution for toolmakers and manufacturers of discrete parts. (See CimatronE video)
    2. GibbsCAM®, billed as "The CAM industry's recognized ease-of-use leader, offers simple to use, yet extremely powerful, solutions for programming CNC (Computer Numerical Control) machine tools". (See GibbsCAM® video)

    Entering 3D Printing Software Sales

    Cimatron brought industry expert Terry Wohlers onto their newly established 3D printing advisory board last year, and CEO Danny Haran stated at the time:

    "The creation of a 3D printing advisory board, and Mr. Wohlers' appointment to it, is aimed at accelerating Cimatron's efforts in entering the additive and hybrid manufacturing field."

    Terry Wohlers added:

    "Cimatron has long been a strong player in the CAD/CAM software market, and it is only natural for the company to leverage its knowledge of manufacturing software solutions by exploring opportunities in 3D printing."

    In the Q4/2013 conference call CEO Danny Haran states:

    "2014 will mark our first release of software solutions for the Additive Manufacturing markets also know as 3D printing. CimatronE version 12 scheduled for release in mid-2014 will offer conformal cooling and AMF support, both directly targeted towards Additive Manufacturing. Additional work is also underway on providing additional Additive Manufacturing solutions.

    As we expected, we keep discovering new uses and applications of our software in this exciting field. We believe Additive Manufacturing, both from metal and plastics will become a more significant part of our business in the coming years."

    Expected revenue expansion from 3D printing hasn't gone unnoticed by Chardan Capital Markets either: "Chardan Capital Markets Starts Cimatron Ltd. (CIMT) at Buy; Foray Into 3D Could be 'Game-Changer."

    Cimatron EPS Growth and Trailing PE Compared To Other 3D Printing Software Stocks

    Company

    Quarterly Earnings Growth (yoy)

    Trailing PE

    Autodesk (ADSK)

    -27.7%

    52.8

    Dassault Systèmes(OTCPK:DASTY)

    12.8%

    32.6

    Cimatron (CIMT)

    69.7%

    16

    source: Yahoo Finance, verified with Fidelity Investments

    Conclusion

    The Barron's article, Beware 3-D Printing! isn't a swipe against all stocks in the 3D printing industry, only those with multiples that can not be supported in a reasonable market. Barron's suggests "buying stocks of software companies that have something to do with 3D printing but which are diversified into other areas", in this review.

    With a history of sustained revenue and earnings growth, a trailing PE of 16 (using GAAP "real numbers" accounting, not "headline numbers" accounting), and revenue expansion expected to further increase with the launch of their 3D printing software suite this year, I believe Cimatron is one of the best investments in the 3D printing space at the present time.

    Disclosure: I am long shares of CIMT

    Disclosure: I am long CIMT.

    Mar 12 10:24 AM | Link | Comment!
  • 3D Printing Investors, Meet Lomiko Metals (LMRMF)

    As an important preface to this article I have to say that I don't invest in penny stocks often and only write about them on rare occasions. Two penny stocks I've mentioned on 3DPrintingStocks.com I gave "Caution Advised" warnings on: Makism 3D Corp. (OTCQB:MDDD) on third day of trading, (a month later, MDDD was suspended from trading by the SEC), and medical marijuana company suddenly turned "3D printing" company, Puget Technologies Inc. (OTCQB:PUGE). I guess pot purveyor PUGE is looking for some buzz as a new "3D Printing" stock.

    Prior to today I've only introduced one true penny stock as a legitimate investment, which was Sigma Labs (OTCQB:SGLB) when it was trading at .0326/share. Sigma Labs provided a return for subscribers of over 400% in a 6 month period and outperformed all other 3D printing stocks over the last 3 months of 2013. That performance was due to Sigma Labs' legitimate business and potential in the 3D printing industry, and I remain a shareholder.

    The stock I'm writing about today is a rare penny stock that I view as having similar potential to Sigma Labs for share price appreciation during 2014.

    I spend a great deal of time looking for what I believe are legitimate, undiscovered stocks in the 3D printing space because I believe that's where the major gains will be over a 3-6 month period as they undergo discovery by the broader market.

    The little-known penny stock I'm introducing today has legitimate upside potential for 3D printing investors based on four factors:

    1. The market for their product
    2. Current and potential future value of existing assets
    3. Supply and demand imbalance predicted
    4. Entrance into 3D printing materials market with an established leader

    I'll cover each of these factors in this article.

    Meet Lomiko Metals (OTCPK:LMRMF)

    Lomiko Metals is a development stage company and the smallest I've profiled with 85M shares outstanding and a market cap under $5M as of 12/26/13.

    The company is headquartered about 20 miles SE of Vancouver British Columbia, trades on the TSE under ticker LMR and in the US under$LMRMF. Lomiko is submitting their Annual Information Form (AIF) to the US OTC market for OTC.PK listing by Feb. 15, so the stock will be more accurately quoted with a proper bid/ask in the U.S.

    Lomiko may then uplist again to the OTC.QX (the highest tier of the OTC market) according to management.

    In addition to owning a 100% stake in a graphite-rich property of approximately 4,000 acres, Lomiko has entered a partnership to supply graphene and develop graphene-enhanced materials for 3D printing.

    lomiko metals

    The Market for Graphene

    Derived from the mineral graphite, graphene is comprised of a single layer of carbon atoms bonded together in a repeating pattern of hexagons. Isolated from graphite in 2004, graphene is one million times thinner than paper, stronger than a diamond, and conducts electricity 30 times faster than silicon- approaching the speed of light. If that weren't enough, graphene is also flexible and transparent.

    CNN recently dubbed graphene a "miracle material" in this informative article and accompanying video that's well worth the watch.

    Another recent video (published 11/12/13) on the properties and potential of graphene

    Note the ending of this video which states that "Graphene is an amazing material to use, but a really difficult one to produce reliably".

    Well, according to Lomiko Metals and their new partner, Graphene Laboratories, (a private graphene R&D company and graphene supplier), they've found a way to do it: Graphene Labs Successfully Converts Lomiko's Flake Graphite to Graphene Oxide

    Lomiko Metals CEO, Paul Gill on this recent development:

    "One of the barriers to widespread use of graphene is the cost of producing it in useable forms. By confirming that graphene may be easily created from natural flake graphite, Graphene Labs and Lomiko hope to produce the material on a larger scale and at a reduced price."

    Now imagine graphene with all of its extraordinary properties as a material for 3D printing, and you'll start to see the potential of Lomiko Metals as a development stage company now in a partnership to develop graphene-enhanced materials for 3D printing (more on this later).

    Current and Potential Future Value of Existing Assets

    Development stage companies often have few hard assets and trade based only on their future revenue-generating potential. Lomiko Metals however has a 100% ownership stake in the Quatre Milles graphite property (see analysis) as an asset valued at $1 million.

    I contacted Lomiko's CEO Paul Gill and asked if he could provide an estimate of potential future value of the property when full scale graphite mining begins. Because the following includes forward-looking statements the following applies:

    "This article may contain forward-looking statements as defined by federal and state securities laws. Forward-looking statements include statements concerning plans, objectives, goals, strategies, expectations, intentions, projections, developments, future events, performance or products, underlying assumptions and other statements which are other than statements of historical facts. Forward-looking statements are only predictions that relate to future events, or the company's future performance, and are subject to known and unknown risks, uncertainties, assumptions, and other factors, many of which are beyond the company's control. As a result, we cannot guarantee future results or performance as that performance is not necessarily indicative of future results."

    Paul Gill, CEO of Lomiko Metals:

    "Based on the financials and the current status of the Quatre Milles property in Quebec, the acquisition and exploration cost of the project is approximately $ 1,000,000. We have not defined a resource on the project and there is no Pre-Economic Assessment (PEA) so we cannot put an official value figure on deposit at this point. Investors are cautioned against using this rationale as a basis for investment.

    Having a look at similar deposits that have gone to Pre-Economic Assessment (PEA) and Bankable Feasibility Studies (BFS) such as Northern Graphite, would be the only way to offer a best guess. I have dialled down the numbers as much as possible to be conservative.

    Northern Graphite has estimated a Net Present Value of their property at $ 89.3 million and trades at .68 Cdn with 50 million shares out and a Internal Rate of Return of 26.3% - based on the a selling price of graphite of $ 2000 per tonne and a 2% graphite grade for the feed stock (un-processed ore from the ground). The market cap of NGC is $ 34 million.

    Lomiko is at .05 Cdn with 85 million shares out, a market cap of 4.5 million. Our goal is to define 5 million tonnes of 5% which would equate to 250,000 tonnes of graphite.

    Of that graphite, our conservative estimate 20% will be graphene grade. So, the remaining 200,000 tonnes at $ 1,000 per tonne would be $200 million of graphite roughly with a cost of extraction of $500 leaving a $ 100 million margin (very rough estimate).

    The 50,000 tonnes we could use in the graphene market are more interesting. Currently graphene sells at $ 100 per gram. Obviously the price will come down. Let's use an estimate of $ 1 per gram = $ 1000 per kilogram or $ 1 million per metric tonne.

    50,000 tonnes of graphite converted to graphene at $ 1 per gram is $ 50 billion dollars. That leaves a lot of room for cost of manufacturing, marketing, etc.

    With 9000 patents related to graphene and (our partner) Graphene Labs having 6000 customers buying graphene oxide and other forms of graphene from their online website graphene-supermarket.com, we think this market alone is going to be profitable and we have clear path if we can attract risk capital.

    The net is going to be at least 50% after all is said and done. This is our rationale for the project and not a viable estimate or one that investors should rely on to make investment decisions. There are many risk factors not mentioned including technological change.

    Now remember, that doesn't include the development of the products or sale of the products yet such as graphene filament, wire for FDM, and other forms of 2D electronics and 3D printing, etc. That will be another study unto itself.

    This has been my rationale for proceeding with the Graphene Labs deal to this stage. There is a lot of blue sky potential."

    Supply and Demand Imbalance Predicted

    (click to enlarge)

    In addition to the increasing imbalance between graphite supply and demand seen in this chart, there was news out of China last week that could create a short term price spike for graphite flakes. Due to a government-ordered production halt, approximately 10% of the global supply of graphite flakes will come off the market.

    See: Flake graphite price could spike as China orders production halt.

    lomiko metals

    Source: The Centre for Research on Globalization

    Now Entering 3D Printing Materials Market with Graphene

    Lomiko Metals is now joining forces with an early mover and world leader in graphene R&D and graphene supply, Graphene Laboratories, Inc. Privately held Graphene Labs operates one of the first and largest graphene supply sources in the world at Graphene-Supermarket and Maxium Materials, and has distributors in S. Korea and Hong Kong.

    Lomiko and Graphene Laboratories are launching "Graphene 3D Labs" for the development and sales of graphene-based 3D printing materials. As part of the deal, Lomiko will be the exclusive graphene supplier. Lomiko Metals also has an ownership stake in Graphene 3D Labs as well.

    See: Lomiko Metals and Graphene Laboratories Launch Graphene 3D Labs-A Company Focused On 3D Printing With Graphene Materials.

    Here is a PDF on Graphene 3D Lab Inc.

    Note that "prototypes are ready" in the presentation. How far off can commercialization of graphene-based 3D printing materials be?

    I agree with CEO Paul Gill that "There is a lot of blue sky potential" in this partnership.

    lomiko metals 3d printing

    The Real Deal

    As a testament to their validity as "the real deal" in the graphene R&D space, earlier this month Lomiko and Graphene Labs announced success in a project with Stony Brook University to develop a graphene supercapacitor, see: Lomiko, Graphene Labs and Stony Brook University Project Produces Graphene Supercapacitor Prototype.

    I'm careful about penny stock companies that make bold claims with no substantiation. In my view, the success of Lomiko Metals working with Graphene Labs and the State University of New York in developing a graphene supercapacitor validates the company as a true player in the space.

    Conclusion

    3D printing investors looking for a materials supplier as part of their 3D printing portfolio may want to consider Lomiko Metals. I believe there is limited downside risk at current levels due to the intrinsic value of the company's hard assets in their Quatre Milles graphite property, and potential for significant share price appreciation due to the four factors discussed above.

    Graphene has extraordinary potential as a game-changing material for 3D printing. Early movers like Lomiko Metals in partnership with Graphene Labs could become the beneficiaries of this amazing material's potential as it becomes commercialized and utilized in 3D printed components and products that contain revolutionary properties.

    Disclosure: I am long OTCPK:LMRMF.

    Dec 27 5:19 PM | Link | 3 Comments
  • The Best 3D Printing Stock To Buy Now Is One You Haven't Met: Groupe Gorge (GOE)

    3D printing stocks have increased dramatically in value during 2013, in part due to the industry's projected CAGR of 25-30% for the next 3-5 years. While additive manufacturing/3D-printing has been around for two decades, advances in hardware and software technologies as well as expansion in available materials utilized in 3D printing are moving the industry from small sized production and prototyping to manufacturing capabilities.

    The four largest publicly traded 3D printing stocks on U.S. exchanges are 3D Systems Inc. (DDD), Stratasys Ltd., (SSYS), The ExOne Company (XONE), and voxeljet (VJET).

    Metric

    3D Systems

    Stratasys

    ExOne

    voxeljet

    Market Cap

    $8.02B

    $5.9B

    $822.8M

    $431.9M

    Revenue (ttm)

    460.2M

    $400.47M

    $41.5M

    $13M

    EPS (ttm)

    .46

    -.80

    -.25

    -2.72

    PE (ttm)

    168.1

    N/A

    N/A

    N/A

    (Source: Fidelity Investments as of 12/4/2013)

    Many reasonably conclude that forward growth has been priced into the shares of these companies. Not surprisingly, the best 3D printing stock to invest in now could be a newcomer to the industry that doesn't have the burden of the above multiples to overcome. But simply being a newcomer with strong fundamentals doesn't lead to growth in sales or ultimately, in share price. It's critical that the company is launching a competitive product for the market with patented technology to form a protective moat.

    One company I came across recently has all of these- strong fundamentals, an innovative new product launching, and patented technology. It's a company very few 3D printing stock investors have met to date, making it an undiscovered player with considerable upside potential and (in my opinion), the best 3D printing stock to buy now.

    Meet Groupe Gorge

    Groupe Gorge is a French engineering company trading on the NYSE Euronext exchange under the ticker GOE. The company has engineering expertise in a variety of fields including development of flight and naval simulators, robotics, command and control systems, as well as nuclear and fire safety systems. The Gorge Group is now making a strategic move into the 3D printing industry with the acquisition of "Prodways", a 3D printing OEM started by a chief scientist from 3D Systems, Andre-Luc Allanic.

    Prodways (formally called Phidias Technologies) sold 17 of their industrial 3D printers during the last 3 years, mostly to German customers. This was accomplished by founder Andre-Luc Allanic with a skeleton crew of help. Since the acquisition, Prodways has added additional engineers, a sales team, and has access to a built-in customer base from the Gorge Group.

    The Technology

    While it may be too soon to tell, Prodways printers may be a hit technologically. The printers utilize a newly-patented (with patent pending in US) technology that combines UVA LED and moving DLP.

    Prodways founder Andre-Luc Allanic on the company's new 3D printers- click for YouTube video.

    Group Gorge CEO, Rafael Gorge, lists the following competitive advantages in their Prodways lineup of 3D printers:

    1. Most detailed parts on the market at high throughput : hundreds of tiny parts in just a few hours at a resolution of less than 35-µm
    2. Unequalled resolution, more than half a billion pixels per layer
    3. High precision in the 3 dimensions (horizontal AND vertical), essential in many applications such as dental
    4. Very large sized parts while retaining the same precision required for intricate and exacting parts such as those used in biomedical
    5. The technology permits the use and development of premium innovative composite and hybrid materials with impressive mechanical, physical, esthetic properties, as well as biocompatible materials for a wide variety of medical applications
    6. Profitability is significantly improved due to incredible speed and considerable reductions in production costs
    7. Up to 10 times faster than market standards
    8. Technology allowing for unequalled production volumes
    9. Superior surface quality requiring minimum finishing
    10. Minimum operating costs due to lack of expensive wear and tear on parts
    11. Replacement of LED light source cheaper than laser

    More information on Prodways, their potentially game-changing technology, management, and vision can be found on their web site at Prodways.com.

    The Fundamentals

    The fundamentals of the Gorge Group are more closely aligned with a value stock than one now entering the high growth 3D printing industry. The company even has a history of paying dividends.

    Current P/E Ratio (ttm)

    33.1

    Estimated P/E(12/2013)

    23.8

    Earnings Per Share (EUR) (ttm)

    0.327

    Est. EPS (EUR) (12/2013)

    0.455

    Market Cap (M EUR)

    125.58

    Shares Outstanding (M)

    11.57

    Dividend Indicated Gross Yield

    2.95%

    Cash Dividend (EUR)

    0.32

    Dividend Ex-Date

    06/24/2013

    5 Year Dividend Growth

    14.87%

    (source: Bloomberg, as of 12/4/2013)

    Prodways Successful Launch at EuroMold 2013

    The Gorge Group officially launched their Prodways lineup at EuroMold 2013 in Frankfurt last week and according to French online source The New Factory, they had a sales win with a large company in the dental industry while there. Arnaud Guedou, sales and marketing director for Prodways, said that the Prodways booth at the event was so busy he couldn't even stop for lunch.

    M. Guedou wasn't the only one noticing how busy the Prodways booth was at their EuroMold debut. TCT Magazine stated that the Prodways stand was "conspicuously popular". After getting to know Prodways technology and capabilities, TCT magazine noted that "It seems highly probably the additive manufacturing community in Europe and further afield will be hearing a lot more about Gorgé, Allanic and their Prodways creations" in their review "Getting to Know Prodways better at EuroMold".

    Rachel Park, editor of 3DPrintingIndustry.com said Prodways is "definitely one to take a look at / keep an eye on" in her EuroMold report.

    Groupe Gorge Trades on the NYSE Euronext Exchange

    Buying shares of The Gorge Group may require an extra step or two for some investors. At the present time the stock trades on the NYSE Euronext Exchange under the ticker GOE. Not all online brokers from across the pond offer trading on foreign exchanges so investors in North America will have to call their broker to inquire. Getting set up to buy shares on the NYSE Euronext is otherwise a simple process taking a few minutes over the phone. The exchange trades from 3:00 a.m.-11:30 a.m. EST.

    CEO Raphael Gorge hasn't ruled out a move to a different exchange. In an interview from 11/29 he stated:

    "The potential of 3D printing is almost unknown on European stock market. If this was to last for long, we could envisage any financial strategy that enables us to reach the huge financial leverage our competitors have."

    In my view, this makes buying shares on the Euronext an even more compelling investment since there is clear potential for those shares to trade on a US exchange at some future date.

    Conclusion

    I've been investing exclusively in 3D printing stocks since long before the well known players were priced to perfection. I believe the best opportunities for share price appreciation over the next 3-6 months are with companies that the market hasn't discovered yet, that have innovative, potentially game-changing patented technology, and a competitive management team ready to take on the established names. This describes The Gorge Group. Moreover, with a forward PE ratio of less than 30, a diverse revenue base from more than 3D printing alone, and a market cap below $200 million, my pick for "The Best 3D Printing Stock to Buy Now" is, unequivocally, Groupe Gorge.

    Dec 09 1:33 PM | Link | 5 Comments
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