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Investing in Revolutionary Technology

September 21, 2011 | About:
matsandalex

matsandalex

10 followers
One of the exciting technology trends of the future is 3D Printing. The technology allows companies to create rapid prototypes using an ABS plastic. Essentially, CAD designers create 3D models and the printer prints layer upon layer using plastic (usually ABS) instead of ink jets. If you are wondering what 3D printing looks like, you can watch this video that shows how an elaborate tool can be printed with ease. Although the technology has been in use for over a decade, there has been a dramatic change in the last few years. The process is less expensive, less labor intensive and not nearly as time consuming as in years past.

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.

Rating: 2.7/5 (9 votes)

Comments

vangorilla
Vangorilla - 3 years ago
You're correct. Making gig gains in the stock market is done by finding revolutionary or disruptive technology.

I turned $10k into $2.8m in 2 years by spotting companies with revolutionary technology.

I show you the tool that spots these companies in my book, www.howtofindbigstocks.com

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