Best of the Week
Most Popular
1.U.S. Housing Bull Market Over? House Prices Trend Forecast Current State - Nadeem_Walayat
2.The Coming U.S. Economic Collapse Will Trigger a Revolution - Harry_Dent
3. Stock Market Crash a Historical Pattern? - Wim_Grommen
4.Global Panic - U.S. Federal Government Stockpiling Ammo – Here’s What We’re Going to Do - Shah Gilani
5.AI, Robotics, and the Future of Jobs - Aaron Smith
6.This is Your Economic Recovery With and Without Drugs - James_Quinn
7.Gold and Silver Price Getting Set To Explode Higher - Austin_Galt
8.The Something for Nothing Society - Lifecycle of Bureaucracy - Ty_Andros
9.Another Interesting Stock Market Juncture - Tony_Caldaro
10.Inflation vs the Deflationary Straw Man - Gary_Tanashian
Last 5 days
The Ultimate Demise Of The Euro Union - 1st Sep 14
Palladium Price Breaks Multi-Year High Over $900 - 1st Sep 14
When Complexity Becomes Chaos - 1st Sep 14
Designer War By Default - 1st Sep 14
Islamic State or Russia? Ten Key Questions Towards Pragmatism - 1st Sep 14
Mixed Emotions for the Gold Market - 1st Sep 14
These Clowns Are Dragging Us Into War with Russia - 1st Sep 14
Marx And The Capitalist Cancer Of Overproduction - 1st Sep 14
Scottish Banks Salivating at the Prospects for an Independent Scotland of 6 Million Debt Slaves - 1st Sep 14
Small Man Europe Is Now In “Effective State Of War” With Russia - 31st Aug 14
The Unintended Blowback Of False Flags - 31st Aug 14
Tesco Supermarket Death Spiral Latest Profits Warning and Dividend Slashed - 31st Aug 14
Dow, Gold and Silver - A Last Stand, A Fake Out And A Surge - 31st Aug 14
If U.S. Consumers are so Confident Why aren't They Spending? - 31st Aug 14
Scotland Independence House Prices Crash, Deflationary Debt Death Spiral - 31st Aug 14
Obama’s “Catastrophic Defeat” in Ukraine - 30th Aug 14
Stock Market Inflection Point Approaching - 30th Aug 14
Gold And Silver - Elite's NWO Losing Traction. Expect More War - 30th Aug 14
Corporations Join Droves of Americans Renouncing US Citizenship - 30th Aug 14
Peter Schiff U.S. Housing Market, House Prices Bubble Warning - 30th Aug 14
Russia, Ukraine War - It’s Time to Play the “Gazprom Card” - 29th Aug 14
The One Tech Stock Investment You Should Never Sell - 29th Aug 14
Bitcoin Price $500 as Current Downside Barrier - 29th Aug 14
Don't Get Ruined by These 10 Popular Stock Market Investment Myths - 29th Aug 14
Low Cost Transcontinental Gold - 29th Aug 14
Gold Bullish Central Banks Should Give Money Directly To The People - Helicopter Janet? - 29th Aug 14
US House Prices Bull Market Over? Trend Forecast Video - 29th Aug 14
The Fed Meeting at Jackson Hole Exposed Yellen’s Greatest Weakness - 29th Aug 14
AAPL Apple Stock About To Get sMACked - 29th Aug 14
A History of Unlimited Money: Learn From It or Repeat Its Mistakes - 29th Aug 14
How You Can Play to Win When Market Makers Are Calling the Shots - 28th Aug 14
EU Gas Supply Is In Real And Imminent Danger - 28th Aug 14
Central Banks at the Root of Evil - 28th Aug 14
European Bond Market: Bubble of all Bubbles! - 28th Aug 14
Employers Aren’t Just Whining: The “Skills Gap” Is Real - 28th Aug 14
The ISIS Menace - Just What We Need, Another War - 27th Aug 14
The Risky Business of Methane-Rich “Fire Ice” - 27th Aug 14
CFR Recommends Policy Shift that is Very Bullish for Gold - 27th Aug 14
Ukraine Standoff Signals Global Power Shift - 27th Aug 14
Stock Market Panic Decline Begins - 27th Aug 14
The Monopoly of the Government Education Cartel - 27th Aug 14
How to Invest in Silver Today for Double-Digit Gains - 27th Aug 14
The Big Solar Energy Breakthrough We've Been Waiting For - 27th Aug 14
U.S. Empire’s Bumpy Ride - 27th Aug 14
Gold Market and the Interest Rate Trap - 27th Aug 14
Stock Market Staring Into the Great Abyss - 27th Aug 14
A Look at the Coming 30-year Inflation Cycle - 27th Aug 14
Forex Trading - Will USD/CHF Rally Above 0.9200? - 27th Aug 14
Europe’s Depressing Economy Dog Days of Summer - 27th Aug 14
How The Coming Silver Price Bubble Will Develop - 26th Aug 14
A Nation of Shopkeepers - Supply-Side (Voodoo) Economics? - 26th Aug 14
Stock Market Bear Tracks Abound In Wall Street - 26th Aug 14
65,000 U.S. Marines Hold up a Mirror to the Economy - 26th Aug 14
Bitcoin Market Provides Clues for Investors - 26th Aug 14
The Key to Trading Success - 26th Aug 14
Will The US Succeed in Breaking Russia to Maintain Dollar Hegemony?... - 26th Aug 14
Even Mainstream Academia Worried about Massive Bubbles in Markets - 26th Aug 14
Iraq and Syria Follow Lebanon's Precedent - 26th Aug 14
Colonization by Bankruptcy: The High-stakes Chess Match for Argentina - 26th Aug 14
Dow Stock Index On The Cusp - 26th Aug 14
Prohibition Laws and Agency Regulations - 26th Aug 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Biggest lie in Stock Market History Revealed

Is it Too Late to Invest in 3D Printing?

Companies / 3d Printing Mar 21, 2013 - 09:53 AM GMT

By: Investment_U

Companies

David Eller writes: It’s rare these days to get in on the ground floor level of an investable trend in technology.

It seems like most of the big technological leaps have already taken place. Whether it’s something as dramatic as a smartphone or as subtly useful as paid search, these huge ideas don’t come around often.

That said, 3D printing may be the next game changer in technology. The industry has been around for a while and the stocks had a great run in 2012.


But we’ve seen a pullback since the Consumer Electronics Show in January, which coincided with the peak. I’m excited about the industry for three reasons:

•The possible emergence of the dental market.
•Falling prices for “prosumer” printers.
•Recent acquisitions offering padding to the upcoming quarter. Additionally, now that we’ve had a pullback, forward valuations for the two premier companies are reasonable.

A Quick Overview
Printing in three dimensions is essentially just layering material. A printer deposits a layer of plastic 28 microns thick (about a third the thickness of a human hair) in the shape of an object’s silhouette, and then adds additional layers until a custom part is formed.

The business case for this today lies in the hands of enabling industrial engineers to do three things:

•Develop proofs of concepts.
•Create prototypes.
•Build production parts.

It’s simply much cheaper, faster and more accurate to print your own part than it is to build a sand-cast model and have it sent out for fabrication.

Any design, production, or engineering company would be a potential customer today. NASA, for instance, used 3D prototyping for 60 to 80 parts on its new lunar rover. These are not necessarily final parts, but a plastic part will initially be printed up in a few hours, tested and modified before eventually being fabricated using the perfect materials. In some cases, clients will even use these parts in production. Diebold (NYSE: DBD) has used fabricated parts in production testing versions of their ATMs.

Whether it’s a plastic casting of the next version of Citi Field or a door handle on the next BMW (OTC: BAMXY), it’s cheaper and faster to build internally using 3D printing.

There’s Still Plenty of Room to Grow
Today, there are 40 million active licenses of Computer Aided Design software, but only 50,000 3D printers in production. There will never be a 1:1 comparison. However, if it could be 50:1, the opportunity is 16 times larger than the current market size.

Future verticals offer new opportunities that aren’t in analysts’ models. Without getting too far ahead of ourselves, consider the dental market.

Imagine going to the dentist with a broken tooth. The technology is becoming available right now to print a ceramic crown – inside the dental practice. This would save days, if not weeks, of walking around with a temporary filling. From the perspective of the industrial 3D printers, the only difference is the base material used for fabrication.

Stratasys (Nasdaq: SSYS) is the leading industrial vendor. The company developed a name for itself using a technology called Fused Deposition Modeling (FDM).

FDM allows clients to produce parts that are closest to production materials in terms of strength, flexibility and weather resistance. By taking the lead in materials, Stratasys has built a tier-one customer list including Bell Helicopter, Ducati, Dana Holding Corporation (NYSE: DAN), Piper Aircraft and Medtronic (NYSE: MDT).

Building on its lead in materials, Stratasys recently merged with Objet, which is developing the first multi-material printing solution. Investment positives for Stratasys include a top-notch customer list, expertise in a wide variety of materials and expansion into the dental industry.

3D Systems Corp. (NYSE: DDD) has an edge in design and distribution. The company has more patents than employees with 1,200 filed. Plus it offers full-color printing capability. The ability to manipulate color should give DDD a significant edge in the home market, as well as the lowest price point at $1,300.

From an investment standpoint though, I like SSYS better. The problem with DDD, as I see it, is the increasing competition for the consumer market. Also, the CEO recently sold 500,000 shares. That was more than half of his holdings. Although there are many harmless reasons insiders sell stock, so many shares could be a warning sign.

The Razor/Blade Model
After numerous recent acquisitions, the two companies look alike in terms of revenue and market cap. But as the market develops, there will be an important profit shift from machines to consumables. Each company is selling the consumable materials used in the printers, which could represent the greater of the profit opportunities. It’s similar to the razor/blade model.

It’s early and there’s no clear winner quite yet. But I believe Stratasys will be able to scale down to the consumer market in time.



* growth rates are not meaningful since both are digesting large acquisitions

Both stocks were high flyers, but pulled back after year’s end. Stratasys dropped 22% from its $90 peak while 3D Systems fell 27% from its high near $46.50.

From a valuation perspective, neither stock is very expensive if you trust consensus earnings estimates for 2013. Stratasys, however, recently released a printer specifically designed for the small-office dental market and simply continues to execute on its core opportunities.

It would normally make sense to simply buy a half position in both companies and let the industry sort it out. However, the recent management share sale at 3D Systems makes me want to take a wait-and-see approach for now.

Source: http://www.investmentu.com/2013/March/ssys-vs.-ddd-is-it-too-late-to-invest-in-3d-printing.html

Good Investing,

by ,

http://www.investmentu.com

Copyright © 1999 - 2012 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014