Last quarter I said “prudent investors might want to wait for a correction before climbing aboard. I think I will wait, DDD is on a parabolic move and parabolic moves often lead to a huge correction”. After DDD reported earnings last quarter the stock fell like a rock. Concerns about the ability to put $500 3D printers in every home came to the forefront. Yes, I agree, a $500 3D printer that makes cell phone cases or artwork is cute, but to get into the American culture, these printers have to provide some higher value.
I like this stock, but feel the bread-and-butter of its customers are industrial companies that use the more expensive printers that cost hundreds of thousands of dollars to make prototypes for mass-produced products. People think the $500 printer is the wave of the future, but I’m not sold. And that’s the key to DDD having a catalyst for explosive growth.
One Year Chart
Now that DD has corrected, the stock is traveling along its lower trendline. Those who trust charts would be investing now. I also like the fact Estimates show profit growth of 24% and 33% the next two quarters. Quarters three and four call for 33% and 27% growth. With a P/E of 28, this stock is reasonable. DDD only beat by a total of 4 cents the last three quarters, so these estimates seem to be what might actually occur.
Also, 2013 estimates didn’t rise, they stayed the same. 2014 estimates fell slightly. DDD upped estimates two quarters ago. I think investors were disapointed DDD didn’t up estimates (as most top notch growth stocks do).
Fair Value
I think this stock is where it should be. If you’re a long-term investor that thinks this industry is cool & hip then go right in.
Sharek’s Take
Last quarter I said warned DDD was on a parabolic move and that could lead to a huge correction. Now that correction is here — or maybe it has passed — and it’s a good time to get into DDD if you really want to. Me? I’ll wait. This business isn’t as stable as most of our others, and I still think the mass-appeal of a $500 printer that makes plastic things isn’t what every household wants for Christmas.
View the Earnings Table here.View the Ten Year Chart here.
