3D Stocks Are Selling Potential
Phillip is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
When I received a video in my email from The Motley Fool about 3-D printing stocks nearly one year ago, I was both intrigued and skeptical about the sector. Many people can relate, and the mixture of skepticism and optimism has essentially guided stock prices for more than a year.
The potential of this emerging market has many people wanting a piece of the action before 3-D printing becomes mainstream. That buying frenzy has sent 3-D stock prices soaring to the point where many are calling the big players in the sector overpriced. But those prices aren't a reflection of the current financial numbers; instead, they reflect the potential of an industry that could change the way people live.
3D Systems (NYSE: DDD) is among a small selection of 3-D stocks with enough cash to really make a go at dominating the sector. I own this stock and see massive growth in the years ahead. 3D Systems is one of the two-largest 3-D printing companies in the world, and its relentless buyout of numerous firms tells me 3D Systems will come out on top.
Stratasys (NASDAQ: SSYS) is nearly neck-in-neck with 3D Systems in the race to determine which company will own the sector. While the firm hasn't executed the level of buying frenzy that 3D Systems undertook, Stratasys merged with Objet last year, a top dog in the market.
However, for the price of these two stocks to be justified, one of them will have to find a way to get into the homes of the middle class. 3D Systems' lowest-priced printer costs $1,299, while Stratasys' cheapest is $9,900. That tells me 3D Systems is closer to lowering its costs to the point where it can sell to the average consumer.
In choosing which 3-D printing company to buy, it's important to pay close attention to each company's technological and acquisition activities. But another way to get into the 3-D market exists, and that is with the companies responsible for the software that businesses such as 3D Systems and Stratasys use.
In taking a look at Dassault Systemes (NASDAQOTH: DASTY), it's easy to see why so many people consider this company to be the go-to source for providing 3-D printing software. The firm is able to make 3-D technology more usable, and with a market cap of more than $14 billion, this company is here to stay.
Shares are up about 13% in the last year and, like all 3-D stocks, there is huge potential for further growth. With the technology the company provides, 90% of printing blueprints are from user suggestions. The intuitive nature of the software is likely the Holy Grail for 3-D printing. Whichever company does come out on top in the 3-D printing world will want a software provider that is able to create electronic-printing blueprints that the consumer wants.
Many companies in any sector with huge potential are going to be overvalued in their early stages, but as sales catch up to potential, the valuation will fall inline. The buying frenzy that happens between potential and realized potential is nothing but profits for the investors who get in early. Right now, I am happy buying potential, and I'll wait for the others to buy in once technological advancements and sales take off.
Phillip Woolgar has a position in 3D Systems. The Motley Fool recommends 3D Systems, Dassault Systemes S.A. (ADR), and Stratasys. The Motley Fool owns shares of 3D Systems and Stratasys and has the following options: Short Jan 2014 $36 Calls on 3D Systems and Short Jan 2014 $20 Puts on 3D Systems. 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!