Up 479% Since 2011 — And Still The Best Way To Invest In 3-D Printing
There are currently more than 118,000 people in the U.S. waiting for a lifesaving organ transplant. But if a group of groundbreaking scientists has its way, that number will soon be zero.
In a massive medical and technological breakthrough, scientists are now successfully producing living human kidneys with a mind-bending technology called 3-D printing. Although these early prototypes are smaller than regular kidneys, the technology carries immense potential not just for medicine, but for the human race and the world alike.
That has been the driving force behind the incredible growth of the global leader in the 3-D printing revolution. With sales and earnings jumping higher, shares are up 143% in the past year and 479% in the past two. Take a look at the market-crushing gains:
But if you missed that bullish move, don’t worry. The 3-D printing boom is still in its early stages, and there are few companies better positioned than 3D Systems (NYSE: DDD) to cash in on that growth.
#-ad_banner-#3D Systems is the world’s largest 3-D printing company. It sells 3-D printers, accessories and services to commercial and retail customers across a variety of industries such as health care, energy, defense and education.
Some of 3D Systems’ most groundbreaking technology is coming from its health care division, where it specializes in custom 3-D implantable devices and prosthetics. That drove a 55% increase in second-quarter sales, surging to $19 million and now accounting for 16% of total company revenue.
3D Systems is also in position to cash in on the incredible technological and financial benefits that 3-D printing offers the commercial manufacturing industry. In a case study profiling one of 3D’s most satisfied customers, Astec testifies that the company’s printing technology completely revolutionized its machinery business. After implementing 3D’s ProJet 5000 printer, Astec said it was able to cut its development time from months to days, produce prototype nozzles in days from two weeks and reduce the cost of production from $2,500 per part to just $50.
As you can see, 3-D printing is already revolutionizing the manufacturing process, and that trend shows no signs of slowing. These are the kind of highly innovative companies that Andy Obermueller profiles in his Game-Changing Stocks newsletter.
Success with large-scale commercial customers has created the foundation for 3-D printing technology to trickle into the lower-budget consumer space. And that is where 3-D is seeing its biggest gains, with personal printing sales up 333% from last year in recent second-quarter results. But looking forward, 3-D is making big moves to keep sales charging higher, recently announcing that Staples (Nasdaq: SPLS) will increase distribution of its Cube 3D printer from a just a few dozen stores to a few hundred.
On the international front, Yamada Denki, Japan’s largest consumer and electronics retailer, has also begun selling the Cube in select stores, setting the stage to access a virtually untapped market and increase its Asia/Pacific sales from 17% of total company revenue. Management expects more leading retailers in North America, Europe and Asia Pacific to begin offering its Cube printer in the second half of 2013.
The company also continues to make big investments in its industry-leading technology, with its R&D (research and development) budget almost doubling last quarter to $10 million. 3D is also expanding its marketing efforts to support its growing product portfolio and expand its sales channels.
But it’s not just organic growth fueling 3D. The company is also focused on growing by acquisition: 3D has executed 31 buyouts in the past 12 years. Not only has that enabled the company to quickly build a world-class portfolio of 3-D printing technologies and patents, it has also set the stage for more consolidation between overlapping specialties and additional operational efficiencies.
Future acquisitions and investments in R&D will be supported by 3D’s strong financial profile, where the company has $349 million in cash after a secondary offering raised $250 million earlier in the year. Debt remains negligible at a little over $12 million. That gives 3D plenty of room to deploy cash, expand its balance sheet and increase operating leverage in a very bullish market.
The string of investments and acquisitions has fueled 3D’s order backlog, up 60% from last year to $58 million.
Risks to Consider: Analysts have recently profiled concerns over 3D’s organic growth rates, margin pressure and weakness in its accessories division. While those are legitimate concerns and could pressure shares in the short run, this is an investment idea that should be viewed through a long lens. And in light of its industry-leading position and world-class portfolio of products and patents, there are few companies, stocks and industries with more long-term growth potential.
Action to Take –> 3-D printing is a game-changing technology, and 3D Systems is the global leader in the industry. That has analysts looking for average annual earnings growth of 28% in the next five years, double the industry average of 14%. But with all the excitement surrounding the industry and 3D Systems, shares are pricey, trading with a forward P/E (price-to-earnings) ratio of 65 times, more than double its 10-year average of 30 and peer average of 34. That makes 3D Systems a buy anywhere below $50 or on any short-term weakness.
P.S. Investors who saw 3D System’s potential two years ago are now enjoying gains of nearly 500%. Our latest research has uncovered the market’s next game-changing stocks. Our previous predictions have returned up to 310% gains in a year. To hear our latest, including how Apple’s next breakthrough could kill the traditional bank, click here.