Making Money in 3-D Printing
Ash is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
3-D is big business. I’m not talking about 3-D TVs or 3-D movies, I’m talking about 3-D printing. 3-D printing is currently taking the investing world by storm. If you want to invest in 3-D printing and the technology around it, you should prepare yourself for incredibly high P/E ratios and the waiting game.
The Butcher, the Baker, and the 3-D Printer Maker
Stratasys develops and manufactures their own line of 3D printers. These printers come in a variety of shapes and sizes. There’s a line of desktop sized printers, a line of stack-sized office printers and factory 3D systems to help in the manufacturing process.
Stratasys is trading at a P/E multiple of 80+. Massive sales and income growth for the company brings the forward P/E to 45.85. The stock is debt free and analysts have a moderate buy rating on the company.
3D Systems is very similar to Stratasys, they offer personal, professional, and production based printers to consumers and businesses around the world. 3D Systems is not experiencing the type of sales growth that Stratasys and it also doesn’t have the massive patent portfolio that Stratasys carries.
Despite the smaller patent portfolio I would think that 3D Systems is still a great buy if you want to own a 3-D printer manufacturer, the analysts also agree.
Manufacturers Too Expensive?
I definitely think they are so I went on the search for ways to play this game without the crazy earnings multiples.
An obvious play in the 3-D market is Autodesk (NASDAQ: ADSK). Autodesk create software that many industry professionals use to create 3-D mockups and fully-functional designs. A great thing about Autodesk is that they have been around forever. The company has customers that have no interest in 3-D printing which also helps create a form of diversification.
Autodesk is rated as “hold” by analysts and it does not bring any kind of dividend along with it. The company does have double-digit sales and income growth though. A double-digit profit as well as very limited debt would keep any investor happy.
If you’re not a fan of Autodesk then there is one more company that I think you may be interested in, and it’s a retail play. Confused? I know I was while looking around. Staples (NASDAQ: SPLS) announced last week that they would be getting in on the 3-D printing game by offering printers in their stores around the world.
Staples may not seem like the type of place you’d want your money, but the company has had continuous sales growth over the last decade and profits have increased a majority of the time. Staples has a manageable amount of debt and is a good way to play the 3-D game if you want a bit more diversity than just the printers.
3-D printing will likely take off. I think that both of the manufacturers mentioned above are priced too highly to make significant returns in the short term. If you truly believe in 3-D and you are willing to hold on to the stock for some time then you could make a lot of money.
Autodesk offers a sliver of diversification and they are a stronghold in the software market around 3-D production.
Staples comes to the game with a yield and with the ability to put 3-D in front of many consumers. The problem with Staples is that it will eventually come down in price and printers will be accessible for a few hundred rather than the $1000+ that they are today.
Ash1402 has no positions in the stocks mentioned above. The Motley Fool owns shares of 3D Systems, Staples, and Stratasys and has the following options: short JAN 2014 $55.00 calls on 3D Systems and short JAN 2014 $30.00 puts on 3D Systems. Motley Fool newsletter services recommend 3D Systems and Stratasys. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!