by Jeff Reeves | December 10, 2013 12:05 pm
3D printing companies have come into their own in 2013, with stocks in this corner of the market doubling and even tripling in some cases.
It’s not hard to understand why. If you’re a long-term investor looking to get in on the next investing megatrend, 3D printing companies are it. On-demand manufacturing can reduce costs for both businesses and consumers, 3D printer programmers are the new software engineers, and 3D printing itself has been a defining cultural trend.
We still are in early days of this trend, and some of the most dramatic applications — such as “printing” human organs for transplant — remain out of reach.
But if you’re a believer in 3D printing, that means there’s still time to invest in the sector.
If you’re looking for the best 3D printing companies to buy now, start with this list of the hottest stocks of 2013: 3D Systems (DDD), Stratasys (SSYS), VoxelJet (VJET), ExOne (XONE) and Proto Labs (PRLB).
Market Cap: $8 billion
YTD Performance: +121%
3D Systems (DDD) is the biggest of the 3D printing companies, and perhaps the best-known since it is the largest stock in regards to both market cap and total revenue. DDD stock has doubled in 2013, and shows no sign of slowing down.
The reason for this stock growth is in the numbers. In its most recent quarter, 3D Systems turned in revenue of about $136 million, up roughly 50% from the prior year. And while earnings were up more modestly, DDD stock is soundly profitable right now — and in fact has been profitable every single quarter dating back to the very beginning of 2009 when the Great Recession was in full force.
That’s proof positive this is not a speculative startup, but a legit business with real potential.
DDD stock recently got a pop after a deal with Google’s (GOOG) Motorola division to manufacture smartphone parts. That’s a huge boost for the company not just in terms of revenue, but also legitimacy. After all, nobody will notice if your 3D printer cranks out slightly sloppy paperweights. There’s no room for a high error rate with smartphone parts, and if DDD Systems can meet this contract, it will help counter an important concern that production via 3D printers is overly complex or takes too long to be practical.
Market Cap: $5.7 billion
YTD Performance: +49%
Stratasys (SSYS) is another established 3D printing company. And while DDD is the largest by revenue, SSYS boasts the largest scale in regards to the number of printers installed.
SSYS has a decent midcap valuation, has put up a market-beating performance in 2013 and operates soundly in the black year after year. And like DDD, the growth is very real. In Q3, Stratasys saw its revenue soar almost 40% to more than $126 million and this year is tracking total sales growth of about 125%.
Stratasys may have underperformed DDD stock in 2013, but it’s gaining steam after the recent acquisition of MakerBot. Not only has the buyout given SSYS more scale, but it also has given it control of the hottest open-source forum for shared 3D printing designs: Thingiverse. Here, owners of a MakerBot can browse blueprints from around the world and buy them — or access them for free if the creators allow.
This social forum provides great resources for those new to 3D printing and could help build the Stratasys brand as the industry grows.
Market Cap: $785 million
YTD Performance: +105%
ExOne (XONE) is a much smaller and thus more speculative play than 3D systems. The company has not yet turned a profit and boasts anemic revenue that’s only in the tens of millions of dollars each year.
But if you want to get in on the ground floor of 3D printing, ExOne might be your last best chance. After nearly doubling so far in 2013, clearly there is big demand for XONE stock based on future earnings despite the lack of current profits in 2013.
ExOne specializes in 3D printers that produce both prototypes and production parts, and has found a place in several industries, including automobiles and energy. While it doesn’t quite have the same consumer appeal as a MakerBot, this “enterprise 3D printing” focus could mean that ExOne is built more on sustainable sales than fad appeal among gadget junkies looking for the latest tech trend.
XONE stock recently sold off after reporting a tough third quarter, including a surprise loss when analysts were expecting a profit. Revenue also missed forecasts.
However, ExOne appears to be on the verge of profitability, and that could mean it’s off to the races once real earnings start to roll in across 2014.
Market Cap: $590 million
YTD Performance: +16% (since October IPO)
Voxeljet (VJET) is similar to ExOne in that it’s a much more speculative play on the 3D printing surge, and that it is a smaller company than DDD or Stratasys that caters mainly to industrial clients.
The company is even more untested, however, seeing as it only went public a few months ago and there’s not that much data about operations.
But while VJET stock isn’t well known just yet by investors or consumers, the company does have a big tailwind at its back in the form of R&D plans. Voxeljet has invested heavily in its research and development budget, with a portfolio of 170 U.S. and international patents and applications. The company raised $84 million in its 2013 IPO, and that will go a long way toward putting those patents into action and seizing the opportunity in the fast-growing 3D printing space.
Market Cap: $1.8 billion
YTD Performance: 80%
Proto Labs (PRLB) is the oddball in this group of 3D printing stocks because technically it is not a 3D printer at all, but a “computerized numerical control” manufacturer.
This is a fancy way of saying that Proto Labs does high-tech machining using robots and other computer-controlled methods to operate machinery and create things. Not quite 3D printing… but pretty darn close.
PRLB is kind of a hybrid between the big 3D printing stocks and the smaller enterprise-driven businesses like VJET and XONE. Proto Labs produces injection-molded plastic parts and custom-machined parts for clients around the globe, meaning it has a business bent, but is set to record more than $160 million in revenue this year and a decent profit.
Furthermore, that revenue would be up 30% over last year.
Pure 3D printing is not yet part of the Proto Labs mission, but it very well could be in the near future either through an acquisition or through R&D. If you’re looking for a way to get your feet wet in 3D printing, this might be the least risky of the group.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not own a position in any of the stocks named here. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.
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