3D printing is much more than a futuristic fantasy, the technology has been working for a long time now, and it´s already being applied in different industries and business areas. Companies like 3D Systems Corporation (NYSE:DDD) and Stratasys, Ltd. (NASDAQ:SSYS) can offer exposure to some pretty unique growth opportunities in the long term, but investors need to consider the risks and manage their positions accordingly. Investing in 3D printing companies promises to be an amazing opportunity, but investors need to play attention to the risks and manage their positions accordingly.
Hot stocks for a reason
3D Systems Corporation (NYSE:DDD) and Stratasys, Ltd. (NASDAQ:SSYS) are in the business of manufacturing and selling 3D printers and related products like materials and services. They have been growing at an amazing speed over the last years, and both companies are already profitable.
Their prices have delivered mind blowing returns over the last years as 3D printing becomes an increasingly popular technology proving its potential in several areas. The stocks have become quite expensive as investors realize the disruptive potential of this technology, but make no mistake; we are barely in the first stages of a long term trend which should provide enormous opportunities in the next years.
Innovation is the driving force of capitalism, and when investors position themselves in the early stages of a new and revolutionary technology, the possibilities for gains can be remarkable. That´s why 3D printing is such an interesting sector: although the technology is already being applied in many different areas, it still has many years of amazing potential for growth ahead of it.
You say you want a revolution
3D printing creates a new paradigm when it comes to the design, manufacturing and distribution of many products. While traditional manufacturing is based on the removal of material by methods such as cutting or drilling – subtractive processes -, 3D printing uses an additive process where successive layers of material are laid down in different shapes to create almost any kind of object.
3D printing can be applied to a wide variety of materials, and it´s currently used in industries like engineering, architecture, dental and medical care, aerospace, automotive, jewelry and footwear among many others. The technology has gained a lot of popularity over the last years, and there are strong reasons to expect substantial growth in the future.
Additive manufacturing makes it possible to create all kinds of objects of virtually any shape from a digital model, and it significantly reduces the waste of materials thanks to its more efficient additive process. This has important implications when it comes to manufacturing speed and efficiency, and it makes rapid prototyping much easier and more affordable.
Besides, as the technology becomes more popular and accessible, it has the potential to radically reduce transportation costs. Instead of having products shipped from another continent, consumers could simply go to their local printing center – or even use their own home 3D printer – and print their own copy of the product they want.
3D printing is having a revolutionary impact when it comes to product customization, creating a new design under the new parading is almost as cheap as manufacturing new copies of an existing one. This is having important implications in the dental care and orthopedics industries, for example, where medical devices especially customized for a specific person can be made in a much cheaper and more efficient way.
And the best part is that we are barely seeing the tip of the iceberg at this stage, as the technology becomes more economical, more popular and easier to use, its long term potential could be practically limitless. The term “technological revolution” is usually used too loosely in Wall Street, but when it comes to additive manufacturing, it’s quite a fair description about its long term potential.
Placing the right bet
Stratasys, Ltd. (NASDAQ:SSYS) is more focused on rapid prototyping; the company sells high-end printers, mostly to clients in the commercial and industrial sector. Stratasys used to be the second largest manufacturer of 3D printers behind 3D Systems Corporation (NYSE:DDD), but the company recently acquired Objet; a leading manufacturer of 3D printers based in Israel. After this merger, Stratasys, Ltd. (NASDAQ:SSYS) became the biggest player in the industry.
3D Systems Corporation (NYSE:DDD), on the other hand, is a bet on the democratization of 3D printers; the company is permanently working on reducing the cost of its products in an effort to make additive manufacturers more accessible for consumers. In addition to printers which represent a 36% of revenue, 3D Systems Corporation (NYSE:DDD) also makes a big proportion of its sales from print materials and services, which brought in a 29% and 35% of sales respectively during 2012.