Proto Labs (PRLB) — This company manufactures computer numerical control (CNC) machined and injection molded custom parts for prototyping and short-run production. At the forefront of the 3-D printing industry, it has a high P/E ratio, and therefore, could be volatile.
Recently reported Q3 earnings were up 28% year over year at $0.37 per share, missing consensus estimates by a penny. The company is projected to earn $1.45 per share in 2013, up from $1.07 in 2012, and $1.78 in 2014.
On Oct. 1, the Trade of the Day said, “Technically, PRLB is in a powerful bull channel with a top around $80 and support at $70.50. This stock should not be chased, but in an uncertain stock market, it will almost certainly appear on the lists of savvy buyers who will bargain-hunt during a general market correction.
“A pullback to $70 could be the level to make a one-third commitment, continuing to add on further declines to its 200-day moving average at $55. Long term, PRLB could provide an enormous return.”
On Oct. 29, I again covered PRLB, saying, “On Oct. 9, the stock fell to a low of $68.29, and then quickly reversed. Trade of the Day followers should now be long a one-third position.
“Following the pullback, PRLB broke above its bull channel, and so it is appropriate to add another one-third to the position. A final third should be added on either a break to a new high or a pullback to the 50-day moving average at $76 as a long-term investment.”
On Oct. 31, the stock fell to a low of $71.19, so readers should now own a full position. For traders who missed the correction, they can enter a buy order at $82 for a trade to $95. But long-term investors should buy PRLB at the current price for a possible double within one year.
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