3D Printer Company Market Watch
Are you seeking for a growth stock from a growing industry with lots of publicity? Can you tolerate volatility and expect great returns either in short or long term? If the answer is "yes," then maybe one of the following stocks is suitable for your needs.
The Six Public Players
It is clear that 3D printing stocks are quite volatile, but with volatility comes opportunities. The stories of the 3D printing companies are only at the beginning, and in the few last years, the companies have started to show what they are made of and how they are going to make the profit. All of the public companies show great promise. The question is which one can deliver the greatest profit with smallest risk and which one could be the market leader or the market segment leader after five years. The P/E ratios for these companies are overflowing with future earnings expectations, and the hype around the industry has surely inflated the stock prices. It remains to be seen if the companies can deliver results that are not disappointing. The public companies in this article are 3D Systems (NYSE:DDD), ExOne (NASDAQ:XONE), Arcam (OTCPK:AMAVF), Protolabs (NYSE:PRLB), iRobot (NASDAQ:IRBT) and Stratasys (NASDAQ:SSYS), Let's start by looking at the companies on general level and the recent stock price developments.
3D Systems is currently seen as one of the most promising 3D printer company. It provides a wide variety of printers and tools to make designing and personal printing easy. 3D Systems also offers its customers tutorials and introductory software to make it easy to try and experience the world of 3D printing. This may prove itself a very important issue, as many conservative people may not trust new technology. 3D Systems offers an easy choice to experience the benefits of 3D printing by allowing customers to try it with minimal costs.
3D Systems has also increased its revenue share from printing materials, which may reduce the cyclical nature of its business. 3D Systems' printers come in different sizes and manufacturing speeds and print mainly different kinds of plastics. 3D Systems has acquired several companies related closely to its core business to support its growth and to gain competitive edge. 3D systems reported February 25th slightly worse results for the year 2012 than what was expected, and its stock price plummeted nearly 20% before rising back to the previous levels. Since then, the stock price has slowly decreased in value in part because of insider selling. This year, 3D Systems will probably introduce a couple of new printers that will strengthen its position as one of the market leaders. Investors should consider this stock while it is still down for a while.
ExOne is the second smallest of the six companies mentioned in this article. It provides printing capabilities in more materials than the others; sand, glass and metals. ExOne concentrates on the industrial customers and thus, it does not compete directly with the larger players. ExOne offers printing and its other services at its production service centers in the U.S. This strategy is both a burden as well as a chance. Maintaining several service centers aggressively positioned throughout the globe and maintaining acceptable capacity utilization rate for their printers may bring in cash, but also costs a lot. On the other hand ExOne will have total control of their machines and printing capabilities.
ExOne is the only one of the mentioned six companies that has negative EPS. After a successful IPO at a price of $18 on February 7th,the reality kicked in for ExOne, and the stock price found a more stable level at $30 after reaching its top price at $33.30. I believe this year ExOne will make its breakthrough and become profitable. If ExOne manages to get enough orders and create long-lasting customer relationships, the ExOne stock price will probably double during 2013. Investors should proceed with caution with this stock, as the company is not yet profitable.
Protolabs provides solutions for prototyping items quickly and cheaply. Protolabs focuses on low-volume and high margin parts. It provides CNC manufacturing as well as injection molding. Protolabs' stock price has been in a steady rise since October 2012 from $28.5 to 46.9. Protolabs is a very interesting choice to invest in and will probably gain more value in near future when the more conservative investors join the 3D printing stock parade.
iRobot aims to provide consumers cheap and efficient machines to help in everyday tasks. iRobot provides a variety of automated vacuum cleaners, floor washing robots and swimming pool cleaners. iRobot does not offer any printers yet, but they have already applied for a patent for it's 3D printer. It is very interesting to see what kind of 3D printer they are up to (or "robot fabricator" as they call it) and how this will affect its stock price. iRobot's stock price has not been affected by printer sales yet. As iRobot does not yet offer any printers, it has a decent P/E ratio for a technology growth company. If it manages to offer a decent consumer priced 3D printer, the stock price may see a sudden growth.
Arcam is the smallest of the six companies, and it is the only one that functions from outside the U.S. Arcam has positioned itself as a high-end 3D printer manufacturer that uses primarily titanium as its printing material. Arcam's customers use their printers to manufacture very precise parts for airplanes and personalized orthopedic implants. Arcam has long business relationships with several key players from both of its main business areas. Arcam's stock price experienced a 20% drop since the February 6th previous top price. Recently it gained almost 40% and reached a new top price on the 1st of March due to a strategic alliance with its new customer from orthopedic industry, and Arcam received a single large order from a U.S. aerospace company.
Since then, the stock price has been declining slowly. During 2013, Arcam will most likely introduce a new cheaper and faster 3D printer for printing larger quantities. This is one weakness I hope Arcam will pay attention to. Arcam's stock price is quite high at the moment, and I would suggest investors wait until it is at more suitable levels. Arcam is traded as a pink sheet stock, but it is also listed at Nasdaq OMX Nordic as STO:ARCM with 31k stocks traded monthly. This should cut out worst fears of a pink sheet company going bankrupt. Arcam has also been profitable for two years.
Stratasys is another versatile 3D printer company with merged companies from several business areas that support its core business functions. This has helped Stratasys gain foothold in such industries as aerospace, automotive, medical and military. The variety of different kind of printers can offer something to each of these industries but to the consumers as well. Stratasys' printers use its own developed plastics mixtures. Stratasys' stock price has been declining since late January, and it lost 30% from its top price. After releasing better-than-expected results on March 4th,. the stock price has been increasing slowly. Stratasys has a quite high P/E even compared to the other 3D printing companies so I would wait for cheaper days.
As the following figure shows, there are several alternative 3D printing companies to invest in. Not any of them are cheap, but as they all are in a growing industry, they all offer quite intriguing stories for future.
As the public companies may currently rule the 3D printing markets, it is the private companies I am worried about. There are several spin-off 3D printing companies that have backgrounds in huge electronics corporations and thus may shake the whole industry.
The whole 3D printing industry is getting more versatile in terms of companies, applications and printable materials. The customer base is growing, and there are a growing number of items that can be printed. This all means that 3D printing is about to hit mainstream big time. When it does, it would be a good idea to own some shares of these companies. Investing in 3D printer companies a still quite risky, but may return nice profits. Each company has its own advantages and disadvantages. If an investor can figure out which one of these companies will be dominant in the future, he/she could easily see significant returns.
Disclosure: I am long OTCPK:AMAVF, DDD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.