3D printers have been helping manufacturing plants for many years now, with lots of machines costing a million dollars each. 3d printers can make prototypes in a snap, and even mass produce simple (plastic) products for sale.
Around a year ago I caught on to the 3D printing craze, because I read that some low-budget printers were selling for around $400 each and they could get into every home in America, kinda like iPads did. Still I was skeptical, as there’s only so many cups and phone covers you can use. I decided to pass on investing when I read this article in which Foxconn’s president said 3D printers were a gimmick and can’t take it to the next level because they can’t make microchips.
Still, 3D printing stocks like 3-D Systems (DDD) are at all-time highs.
One Year Chart
Although I don’t believe in the 3D-printers-in-every-home thesis, I do appreciate how these companies grow rapidly in the industrial setting. Revenue grew 50% last quarter at DDD, impressive. I didn’t read the quarterly report to see how much was via factory machines, but I think most of this revenue was industrial.
DDD has a P/E of 49 (on 2014 earnings). Lastquarter the P./E was 51. I think these figures are too high.
Fair Value
I would like to buy into DDD at 35 times earnings. Right now that would be a correction to the $45 area. DDD based there for many months during the summer, so I feel this is achievable.
Sharek’s Take
3D printers are of great use in the industrial setting, but they still can’t replace microchips, so the potential does have a limit. I’m not a believer in these things hitting every home in America, even at $400 each. This is a good stock to own with growth opportunity, just don’t get caught up in the hype. Look to pick up some DDD if it dips into the mid-$40s.
View the Earnings Table here. View the Profit History here.View the Ten Year Chart here.
