Bulls and a few likely unwitting bears helped print big gains Wednesday in 3D Systems (NYSE:DDD) and Stratasys Ltd. (NASDAQ:SSYS), courtesy of broker upgrades. But for traders looking to spread their risk among the best stocks in the group, saying goodbye to DDD stock and buying SSYS stock alongside peer Materialise NV (NASDAQ:MTLS) is the better play for printing future profits. Let me explain.
A pair of Piper Jaffray upgrades to outperform from neutral for 3D manufacturing equities DDD stock and SSYS stock resulted in hefty gains of 6.33% and 8.03%, respectively, following the analyst Troy Jensen‘s changes. Behind the ratings move, the he cited improving printing demand, a long-awaited shift to production applications finally beginning to emerge and each company enjoying their best positioning for growth in years.
But similar size gains in DDD and SSYS well-removed from their intraday highs and comparable rationale for the upgrades doesn’t mean this is a durable pairing or the two best stocks to own. It makes buying either name more risky in my estimation.
3D Printing Long #1: SSYS Stock
For spread traders wanting smarter exposure from the 3D printing space. I’d pick just one: Stratasys. Of course, I’d also buy MTLS stock to complete the position, but more on that in a moment.
With both 3D Systems and Stratasys on the hardware side of the business, but SSYS stock printing a much stronger price chart and having shed its bearish short interest down to 12% compared to DDD’s 23%; the market is already hinting Stratasys is the better-positioned of the two.
SSYS Stock Weekly Chart
Ideally, I’d wait for a trigger above $25.18 in SSYS stock to get long. The buy point represents a breakout above Tuesday’s high and a price move back above mid-pivot resistance of $24.70 within the bullish double-bottom base construction. But as part of a spread trade with MTLS stock, an allowance to go long with a 10% stop-loss makes sense.
3D Printing Long #2: Materialise NV (MTLS)
Belgium-based MTLS stock hasn’t enjoyed the notoriety or volatile fortunes and misfortunes of SSYS stock or 3D Systems. But Materialise has earned a reputation for capturing solid growth and profits during a couple rocky years for the industry.
Unlike DDD, MTLS stock also distinguishes itself from its hardware peer Stratasys as it’s positioned on the software side of the 3D printing space. This diversification adds to the attractiveness of owning shares and further spreading the industry risk alongside SSYS stock.
MTLS Stock Weekly Chart
Another bonus of buying MTLS stock today as part of a spread position with SSYS stock is that shares have corrected within their uptrend into a nice area of technical support. Shares are currently testing a former cup-shaped base and pair of key Fibonacci levels for support.
Again, and similar to Stratasys, it might be tempting to wait on an ideal entry in MTLS stock. But as part of a spread trade where SSYS stock is showing sure signs of good things to come and MTLS is already in a sturdy uptrend and offering investors an opportunity to buy at a smart-looking discount; this pair looks ready for printing future profits today.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits.