Investing in Revolutionary Technology
Current examples of products being produced by 3D printing are: titanium aerospace parts (using a titanium powder), medical implants, jewelry and even customized lampshades. Some companies have already achieved cost parity with 5000-unit (injection molding) production runs, which means that 3D printing can radically transform manufacturing.
Many believe that individuals will simply send a file of a product they want to a 3D print shop and pick it up at the store. In essence the 3D printing model would be no different than when you order business cards or postcards from a print shop.
There are two primary ways to invest in the 3D printing trend. The two publicly traded manufacturers of 3D printers are Stratasys (SSYS) and 3D Systems (TDSC).
Shares of Stratasys have been battered since May and have fallen over 60%. Despite the huge pullback, shares still trade at over 20X 2012 earnings estimates.
However, the viability of the technology does have some boosters including Vyomesh Joshi, executive Vice President of HP’s Imaging and Printing Group.
“We believe 3D printing will be a very important opportunity long-term, and initially expect to see increased uptake in the commercial sector before it carries over to the consumer market. Similar to the growth of inkjet technology, innovative new industry segments are not built overnight. Given we are still in the early stages of 3D printing, customer awareness remains relatively low, and it is too early to speculate on overall growth targets.”
Interestingly, Joshi expects a growth rate of 15% over the next five years which would be a boon to the two major 3D printer companies, SSYS and TDSC.
“Initial indications from third-party projections and our own analysis are that the 3D printing market could become large and highly profitable, with CAGR of 15% or more over the next five years. The greatest opportunity today is in the mechanical CAD (MCAD) market and associated education applications. For the future, AEC (architecture, engineering and construction) represents another market opportunity.”
The only guru who purchased Stratasys recently was Mario Gabelli. Gabelli holds a small position of only 40,000 shares that he accumulated at prices of over $40/share in the second quarter of 2011.
There are no gurus who currently hold any shares of TDSC.