About five years ago or so, 3D-printing stocks were red-hot. But the good times quickly fizzled.
However, lately there have been signs of life, as a variety of the operators in the industry have experienced rejuvenated growth rates. And, more importantly, the long-term trends look quite favorable for the 3D-printing space.
According to IDC, the spending in the market — on a global basis — is expected to hit about $12 billion this year. And by 2021, the forecast is for the market to reach $20 billion. Much of the growth will come from physical printers and materials, but there will also be opportunities in software systems and services.
So with that prospective growth in mind, what are some of the 3D-printing stocks to buy? Let’s take a look at seven:
3D-Printing Stocks to Buy: 3D Systems (DDD)
3D Systems (NYSE:DDD) is the pioneer of the industry. Chuck Hull founded the company back in 1983 when he invented Stereolithography.
Since then, he has continued to push innovation. As a result, DDD has become a diverse platform, with 3D-printers, materials, software and on-demand manufacturing services. These offerings span industries like aerospace, healthcare, automotive and durable goods.
Although, a few years ago, DDD had some major problems. Its product line was lagging and the competitive environment was getting much more intense.
But the company took swift action and initiated a restructuring. And this was more than just about cost cutting. DDD was smart to double down on its product line as well as to strike some important partnerships.
As a result, the financial situation has improved significantly. For example, during the latest quarter, printer shipment volumes soared by 37%. Keep in mind that this should amplify future revenue growth because this business leads to annuity streams from material sales.
3D-Printing Stocks to Buy: HP (HPQ)
HP (NYSE:HPQ) may seem like a dinosaur among other 3D-printing stocks to buy. After all, much of the company’s business comes from mature industries like PCs and office/home printers.
But somehow HP has been able to gin up growth. In the most recent quarter, revenues increased by 13% to $14 billion and operating cash flows came to $1.05 billion.
On the PC side, HP has benefited from consolidation in the industry and also a focus on higher-end systems (such as gaming PCs). As for printing, the company is investing aggressively in 3D technologies.
Granted, for a company of the scale of HP, it will take time for the business to move the needle. But the company should benefit from its brand and distribution. Besides, HP has been getting traction with snagging large customers and partners, such as Siemens and Forecast 3D (one of the largest 3D manufacturers in the U.S.).
According to HP CEO Dion Weisler on the most recent Q2 earnings call:
“I am really excited about the leadership position we have taken in 3D printing and the segment where we operate in a very short period of time, we are on the path towards disrupting this $12 trillion global manufacturing industry. But it’s a long path, I have always said this is a 5 to 10-year journey and we are making the investments today to really secure shareholder value both today and for the future we are seeing significant sales momentum, including repeat orders from customers as well as service bureaus.”
Clearly, HP is starting to become a standout among other 3D-printing stocks.
3D-Printing Stocks to Buy: Autodesk (ADSK)
Autodesk (NASDAQ:ADSK) is the leader in design software, which has applications across large industries like architecture, engineering, construction, product design, manufacturing and media/entertainment. For the most part, ADSK software helps with complex visualizations and simulations.
So what makes ADSK one of the 3D-printing stocks to buy? 3D-printing is actually an important part of its business.
The company has built an extensive line of applications like Netfabb, TinkerCAD, 3ds Max, Within Medical and Fusion 360. These applications are becoming strategic for customers. Just look at General Motors (NYSE:GM). The company recently teamed up with ADSK to use its design systems to 3D-print components for its upcoming electric vehicles. This approach should mean lighter materials that have higher levels of strength.
ADSK has also been moving toward subscriptions for selling its software, which should lead to more predictable revenues streams. In the latest quarter, these revenues spiked by 103% to $1.4 billion (on an annualized basis) and the subscriber base reached 2.57 million.
3D-Printing Stocks to Buy: Materialise (MTLS)
Materialise (NASDAQ:MTLS) is one of the leaders in the 3D-printing industry. However, the company does not sell any physical printers. Instead, the focus is on building software systems, such as systems for additive manufacturing and healthcare applications.
For example, with its medical technologies, there is the ability to create surgical guides and develop customized implants. And as for manufacturing, MTLS has one of the largest single-site additive service centers.
A key part of the growth strategy has been partnerships. Some of the latest have included deals with HP and HCL.
However, the relationship with BASF (OTCMKTS:BASFY) — a top chemical company — could prove the most beneficial. The company invested $25 million in MTLS. For the most part, this deal is a validation of the company’s business model, which is about creating an open system that integrates with many hardware and software vendors.
3D-Printing Stocks to Buy: Proto Labs (PRLB)
The customers for Proto Labs (NYSE:PRLB) conduct much of their activities online, which is a big time saver. Some of these functions include injection molding, computer numerical control machining, 3D-printing and sheet metal fabrication. And PRLB is the world’s largest digital manufacturer of custom prototypes and on-demand production parts.
Investors have plenty of reason to be excited about this 3D priting stock, as the growth has been strong. For the second quarter, revenues shot up by 34% to $109.7 million and operating cash flows came to $33.2 million. In all, there is $144.9 million in the bank.
PRLB is essentially creating a powerful ecosystem, which is a nice barrier to entry. Note that there are over 19,000 developers and engineers that use the web-based system. This base up by nearly 19% in the latest quarter. As such, PRLB is one of the most promising 3D-printing stocks to keep an eye on in the months ahead.
3D-Printing Stocks to Buy: PTC (PTC)
PTC (NASDAQ:PTC) targets a variety of lucrative business segments, such as the Industrial Internet of Things, Augmented Reality, Product Lifecycle Management and Service Lifecycle Management.
And to top it all off, PTC also has a significant footprint in the 3D-printing market. The two main products are Creo (for product design) and Mathcad (for in-depth analysis for engineering projects). The bookings for this business segment have been robust, as there have been 10 consecutive quarters of double-digit-growth.
The core product for the 3D-printing opportunity is Creo 5, which launched in March. The technology stands out because of its sophisticated integrated topology optimization.
But there is more to come with Creo. PTC has entered a strategic relationship with Ansys (NASDAQ:ANSS), which is a developer of engineering simulation software. The plan is to integrate real-time simulations into Creo, which would likely be another factor in helping boost demand.
3D-Printing Stocks to Buy: Proto Labs (PRNT)
If you don’t want to invest in individual 3D-printing stocks, there is another option: The 3D Printing ETF (BATS:PRNT).
This exchange-traded fund tracks the Total 3D-Printing Index, which includes U.S. and foreign companies based in hardware, software/CAD, print center operations and materials. Some of the holdings include ADSK, Trimble and Stratasys (NASDAQ:SSYS).
The median market cap for this ETF is $8.2 billion. In other words, PRNT provides fairly broad exposure to the market. And as for its expense ratio, it is at 0.66%, or $66 annually per $10,000 invested. Also note that there are $51 million in assets.
Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.