A Renaissance In The Making
AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
With four companies you can explore a new world of invention, a confluence of science and art. Just think what Leonardo da Vinci could have done with 3-D printing, the possibilities of scientific, aeronautical, defense, architectural, artistic, and medical applications. He did indeed dabble in all those fields. Maybe that's why Bill Gates spent millions to buy his notebooks. What could Microsoft be up to?
The three names at the forefront of 3D printing are 3D Systems (NYSE: DDD), Autodesk (NASDAQ: ADSK), and Stratasys (NASDAQ: SSYS). The premise is that a printer like one synched to your computer, using a liquid plastic instead of ink works by means of additive technology, adding layers upon layers of plastic that quickly harden into your objet d'art or whatever. There is another surprise name that is an early investor in home 3D printers Amazon.com (NASDAQ: AMZN).
On a public radio show Chris Anderson, editor-in-chief of Wired and author of "Makers: The New Industrial Revolution," answered a listener's call asking for which 3D printing stock to buy and he said, "The two public companies I would bet on," were 3D Systems, citing its Cube machine at $1300 primarily designed for children, and Autodesk for its Autocad software, apps for "reality capture", and its Instructables.
Michael Weinberg, VP of Public Knowledge and an attorney specializing in emerging technologies, cautioned the listener that as an investor the transition from the most expensive industrial printers to the everyday one in the home, " may mix this industry up a bit, more on the hardware side than the software", adding, "the landscape in 3D printing in 5 or 10 years looks very different than the one today."
Not everyone is as giddy about 3D printing as Chris Anderson, Michigan State University School of Packaging director, Joseph Hotchkiss believes that there are serious barriers to the prophesized new world of disruptive technology including a long learning curve of six months or more for even highly trained engineers on the largest of the 3D machines and the inherent limitations of transporting finished product. To make his opinion understandable in a Star Trek way, you can replicate the object but you also need the teleporter to beam it up.
So which companies are the furthest along on the path to this frontier where everyone can be an artist or inventor? 3-D Systems has been a go to name for investors. It has a 2.40 billion market cap and a P/E of 61.22 with a forward P/E of 27.85. This company has been in the business for over 25 years so it's not just a start up and has reported three consecutive double digit growth in earnings. It also offers the software as well as the printers, both industrial and smaller home versions, and laser sintering.
The company has been acquiring smaller companies that complement the more ambitious uses for 3D printing, like Bespoke Innovations, a maker of personalized orthotics for musculoskeletal medicine (think casts and braces). This is just one of many small firms the company has acquired over the last few years bringing 3D Systems' patent portfolio to over 1200. Larger organizations are taking notice with Lockheed Martin inking a contract just last month with 3D Systems to make fighter jet parts.
CEO Abe Reichental sees the biggest opportunity ahead with the new Cube and predicts it becoming as ubiquitous as ink printers in homes and schools. (For some amazing creations with the Cube click here.)
The stock is up 179.36% over the last year as the Maker Movement (people who use 3D printing to invent things) has gained media attention. It has debt at $131.21 million to $183.93 million in cash. And again, not all investors are as giddy about the 3D trend with a 39.50% short interest.
Stratasys just reported third quarter earnings on November 2. Scottt Crump, Chairman and CEO, was especially pleased with the sales numbers of the Mojo3D commercial printer costing under $10,000 and plans to increase its sales force significantly. He also said the Solidscape division, which makes high res wax casting possible, has gained traction among jewelers and dentists. They also plan to expand its use in schools. Crump was also pleased with the Red Eye On Demand division, a rapid prototyping and direct digital manufacturing provider.
Despite reporting record revenues up almost 25% since the year before and beating on earnings expectations the stock sold off. It had been up 123% over last year. Its P/E is 73.14 but the forward P/E is 38.10.
The company may be much further along the continuum of prototype to delivery than the aforementioned Joseph Hotchkiss' concern as Stratasys' Red Eye division also features 130 On Demand facilities globally that can manufacture the parts as physically close to the client as possible, thus bypassing the "teleporter" problem.
Then there's Autodesk, the software side of the 3D printing revolution, where the CAD, computer aided design comes in play. Autodesk is practically the granddaddy of the group, founded in 1982, and provides design software globally with its most exciting applications in architecture, manufacturing, engineering, infrastructure and even in the entertainment business for special effects. Like the other CEO's, Carl Bass is very optimistic about the future of 3D printing as he speaks in an interview with Wired's Chris Anderson.
The company basically operates in three segments: Platform Solutions and Emerging Business, Architecture Engineering and Construction, and Manufacturing. Surprisingly, this company so necessary for 3D printing is down -0.40 % over the last year. Its P/E at 25.34 and forward P/E of 14.47 doesn't seem to reflect possible growth. The company has no debt and pretty decent cash flow so what's the problem? At their last earnings they slashed guidance for sales by half as they reorganize their sales force and focus on a one-two punch upselling customers to suite software as well as addressing mobile and cloud platforms.
Amazon is an unusual name for 3D printing but it has a stake in Makerbot, a relatively (2009) new Brooklyn NY based startup venture which makes the MakerBot Replicator 2, at home 3D printer. Amazon, of course, is well known as the e-tailer, maker of Kindle and Kindle Fire, cloud host, content streamer, and self-publishing empire. This is the kind of thinking ouside the "bot" that has kept Amazon a tech giant to be reckoned with. It must be mentioned up front the P/E is 2,751.31. Yes, you read that right. The forward P/E is 130.57. But when someone invests in Amazon he or she has to believe along with CEO Jeff Bezos that their strategy has always been to thinks years ahead. Granted, some investors may not want to wait that long but whatever Amazon plans to do with its stake in Makerbot will likely be.. amazing.
It's a given that 3D printing already with its many real life and real time applications in use across different industries is a disruptive technology. But is it the sci-fi dream investment one waits their entire investing life to buy? Maybe it is, the medical applications alone remind me of a nascent Intuitive Surgical. This is one sector where due diligence is of utmost importance as it is very fast moving. And do click on some of the links just to see what can be made with 3D printing. It is astounding.
leglamp has no positions in the stocks mentioned above. The Motley Fool owns shares of Amazon.com and 3D Systems. Motley Fool newsletter services recommend Amazon.com, 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.If you have questions about this post or the Fool’s blog network, click here for information.