Although the idea of 3-D printers is over 24 years old, the public only recently got excited about the prospect as the open source maker movement began to unfold. This movement transformed the face of 3-D printing by significantly bringing down the cost of 3-D printers. What used to cost tens of thousands of dollars in equipment can now be purchased for less than $2,000, putting this technology into the reach of more users. As a result, shares of 3D Systems Corporation (NYSE:DDD) has enjoyed gains of over 200% since its IPO debut in 2011, leading many to proclaim that this small sector has reached "bubble" territory.
Forget the hype. Additive manufacturing is here to stay and will change the face of manufacturing forever. The 3-D printing industry has been growing by an average of 26.4% a year for its entire 24-year history. In 2011, this growth rate has accelerated to 29.4%, indicating that the demand for additive manufacturing is on the rise. By 2015, the 3-D printing industry is expected to become a $3.7 billion dollar industry, and by 2019, it should surpass $6.5 billion. The fact of the matter is that the industry is growing rapidly, which will ultimately translate into increased profits for 3-D printing companies, bringing valuations to a more palatable level.
Put those valuation concerns aside Based on traditional methodologies, 3-D printing companies are undoubtedly overvalued. Stratasys, Ltd. (NASDAQ:SSYS) currently trades with a P/E above 90, giving the classic value investors the cue to avoid this sector like the plague. Motley Fool Co-Founder David Gardner has a different perspective on high valuations. He's not afraid of them, in fact he likes seeing companies that are called "overvalued" by the media. The link will take you to a short five minute video in which David explains the ins and outs of why high P/E's aren't necessarily a bad thing. This approach has allowed David to capitalize on buying "overvalued" companies like Amazon.com, Inc. (NASDAQ:AMZN) and AOL, Inc. (NYSE:AOL) in the early days, which went on to make life changing returns for his portfolio.