3D printing is an additive process in which successive layers of materials are laid down to create a printed object. That’s obvious and it clearly indicates how the process received its additive manufacturing alias. It’s ebbed and flowed in terms of popularity. A simple search of volume for the term “3D printing” proves as much. Interest peaked in 2014 and again in early 2020. Investors in particular are somewhat disappointed as claims of a revolution have amounted to less than their initial billing. It’s been a similar story for 3D printing stocks as a result.
But that doesn’t mean 3D printing stocks are a lost cause. Market research indicates that CAGR is expected at 21% through 2028, when the market could reach nearly $63 billion.
That suggests the 3D printing market is in something of a second spring. Therefore, it makes sense to consider investing now. Here are seven stocks best positioned to profit from that growth in 2022.
- 3D Printing ETF (BATS:PRNT)
- Stratasys (NASDAQ:SSYS)
- Nano Dimension (NASDAQ:NNDM)
- Desktop Metal (NYSE:DM)
- Materialise NV (NASDAQ:MTLS)
- Proto Labs (NYSE:PRLB)
- FARO Technologies (NASDAQ:FARO)
Best 3D Printing Stocks: 3D Printing ETF (PRNT)
If steady returns and holistic growth are your thing, then ETFs will always make sense. Generally investors can’t go wrong by investing in ETFs when chasing sector specific growth. After all, they provide exposure to the movement of an entire sector. That is of course much safer than the inherent volatility individual stocks are subject to.
And if that statistic I referenced above is correct, then investors could expect roughly 20% growth over the next several years from the 3D Printing ETF. The 3D printing ETF is designed to track the returns of the Total 3D-Printing Index. It follows a policy of investing at least 80% of assets into securities from within that specific index.
Since the beginning of 2020, PRNT stock has provided a return of nearly 75% for investors who’ve bought and held the security. The net expense ratio of the ETF is 0.66% so returns would be closer to 74% during that period all things considered.
So, for the conservative, more risk-averse investor, the 3D printing ETF is an excellent choice. Frankly, given those returns over the past two years, it’s hard to say that PRNT stock isn’t a great choice for growth investors as well.
Stratasys recently released third quarter earnings. Not only were they relatively strong, but they also provide a reasonable snapshot of 3D printing companies.
Stratasys did what growth companies are supposed to do: It provided top line growth. Revenues in Q3 reached $159 million, up 24.32% compared to the $127.9 million it reported in Q3 20.
There was also positive news in that the company’s cost of sales increased by 16.25%.
All of that said, the firm still runs a net loss, although one that has substantially decreased. The firm recorded a net loss of $18.1 million, much better than the $404.3 million net loss a year earlier.
All of the positive news on Nov. 4 caused a spike in price for the firm. Prices jumped from $32 to $41, but retreated to around $34 a day later. That’s fairly indicative of the volatility investors will experience in the relatively young asset class that 3D printing stocks represent.
Best 3D Printing Stocks: Nano Dimension (NNDM)
Nano Dimension is an Israeli firm that focuses on the narrow field of additively manufactured electronics and printed electronics.
Nano Dimension isn’t a company that has a large revenue base yet. The company recorded $811,000 in Q2, almost exactly matching the $811,000 of sales it recorded in Q1. But that is what investors should expect from a growth sector like 3D printing.
Likewise, they should anticipate losses. Nano Dimension reported a $13.6 million net loss in Q2, following an $9.3 million loss a quarter earlier.
That isn’t necessarily attractive, but the company does have a proper runway to fund its growth for the next five to six years. The company laid this out in direct terms, stating:
“Our $1.397 billion of financial reserves, enable us to plan for at least 5-6 years with proper qualifiable, quantifiable and measurable milestones and gateways. Typically, early-stage growth companies are forced to focus on performing on a quarterly basis, while compromising proper long-term execution for much higher returns (albeit later in the game).”
The firm used some of those financial reserves to acquire Essemtec AG, a Swiss firm, on Nov. 3. That gives Nano Dimension new capability in printed circuit boards which could help to move the needle over time.
Desktop Metal (DM)
Investors will have to wait about a week for Desktop Metal’s third quarter results on Nov. 15. That said, investors should already be aware of the company’s direction. Desktop Metal is scaling up production of its Production System, P-50.
The company is tripling its manufacturing capacity for producing what it touts as the world’s fastest way to 3D print metal parts at scale. CEO Ric Fulop noted: “After a significant development cycle, we are experiencing growing, pent-up demand for our Production System P-50 solution. As we continue to convert these opportunities, expanding our in-house final assembly capabilities has become a critical step to scaling deployment of our Single Pass Jetting technology.”
Analyst target prices, for what they’re worth, suggest that there’s upside in DM stock at current prices. Those projections suggest DM stock could trade around $13, which would result in reasonable returns at current prices below $9.
Best 3D Printing Stocks: Materialise NV (MTLS)
Materialise is a company based in Belgium that provides software to 3D printing and additive manufacturing firms. It serves industries including healthcare, aerospace, dental and automotives.
Based on recent results and Wall Street’s expectations, Materialise is among the best 3D printing stocks to consider. Q3 revenues increased by 28% and reached $60.437 million in the quarter. That led to a net profit of $10.021 million in the period.
The other positive news that stands out among its financial statements relates to the firm’s reversal of profitability issues. The reported 8.652 million EUR ($10.021 million) profit in Q3 was a significant turnaround from the 282,000 EUR loss in Q3 20. That was part of a weaker 2020 in which the firm also registered a EUR 5.152 million loss throughout the year.
Wall Street is squarely behind the firm, giving it five buy ratings and a single hold rating. Materialise is a 30 year old firm, making it something of an old hand in the young industry.
In any case, the strong results prompted the CEO Peter Leys to increase guidance for the remainder of 2021: “We expect our consolidated revenues for 2021 to be towards the higher end of the 197,000 kEUR to 200,000 kEUR range we previously provided. For 2021, we are increasing our Adjusted EBITDA guidance from up to 25,000 kEUR to up to 28,000 kEUR.”
Proto Labs (PRLB)
Proto Labs is interesting because the company makes fast, low-cost production prototypes. Although serving the prototype industry might not seem sexy at first blush, growth is clearly there. The company provided services to 23,457 customers in Q3, representing a 24.8% increase over the same period a year earlier.
That led the firm to a record quarter in which it reported $125.3 million of revenues. CEO Rob Bodor explained the success amidst supply chain issues: “We achieved record revenue in the third quarter amidst a difficult backdrop of global supply chain issues and labor and materials constraints. During the quarter, we also received external recognition of our best-in-class digital manufacturing capabilities as the World Economic Forum announced our induction into their Global Lighthouse Network, recognizing our industry leading efforts to implement Fourth Industrial Revolution technologies.”
That said, PRLB stock dropped on the news. This was largely attributable to a $10.742 million decrease in operational income which affected EPS numbers. Those EPS figures dropped from 55 cents to 17 cents as a result. To the contrarian this is a good time to pick up PRLB stock given the record revenues.
Best 3D Printing Stocks: FARO Technologies (FARO)
FARO stock should continue to appreciate in price in 2022. Broad indications including revenue figures suggest that the company is headed in the right direction. The 3D printing systems company should record in the ballpark of $341 million of revenue in 2021. That is expected to reach $389 million in 2022, representing an approximate 14% projected growth on a top line basis.
Company CEO Michael Burger noted that his Florida firm faced the same broad troubles plaguing the industry at present: “Demand remained strong in the third quarter, while customer COVID-related logistical challenges shifted some orders into the fourth quarter. As we focus on the growth drivers ahead, we are encouraged by the customer response to our new products, namely our next generation Quantum Max ScanArm and our Holobuilder photogrammetry products which are on track to double over the next year.”
Despite the fact that Q3 revenues were 4% lower than those in Q2 FARO Technologies stock did not suffer. Rather, the markets sent FARO stock from $70 to $82 since the announcement on Oct. 27. Ostensibly that movement is a result of a 12% sales increase in Q3 on a year-over-year basis.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.