Stratasys, Ltd. (NASDAQ:SSYS) and ExOne Co (NASDAQ:XONE) are also right in the middle of this brave new future. Stratasys, as it exists today, is the product of a 2012 merger with Objet, creating a single company more on target with 3D Systems Corporation (NYSE:DDD) in overall size and scope. And with the recent acquisition of consumer market specializer Makerbot, Stratasys and 3D Systems now compete head-to-head in nearly every segment.
ExOne Co (NASDAQ:XONE), however, is laser-focused on industrial applications, especially in materials like metals, sand (yep-you read that right,) and ceramics, and manufacturing highly technical, specialized parts that cannot be made with any traditional manufacturing process. And while Stratasys, Ltd. (NASDAQ:SSYS) and 3D Systems are either acquirers or results of large mergers, ExOne is a rarity in this industry- a spinoff; once part of Extrude Hone, which was itself acquired by Kennametal Inc. (NYSE:KMT) in 2005.
Risks & rewards: What’s the best play?
All of these companies are very early in their stories:
XONE Revenue Quarterly data by YCharts
As you can see, total sales in this segment is miniscule today. I’ve used quarterly data, as ExOne only went public this year. Simply put, these companies aren’t generating a combinedannual sales total of $1 billion yet, but they carry a combined market cap of over $8 billion, meaning the Mister Market is expecting them to all keep growing. I’ve chosen to invest in all three, as the opportunity is just plain massive and it’s impossible to predict which will emerge as the best investment.
With that said, there’s a very real risk that a industrial behemoth like General Electric Company (NYSE:GE) jumps in and changes the game. But with that risk, I think the likely scenario sees one of these three acquired. Simply put, there’s too much patented, proprietary technology held by these three, not to mention the talented people and established distribution networks that a large industrial could leverage with its massive scale. And if a buyout happens, investors will surely get a nice premium over todays share prices.
Foolish bottom line
The effects of this industrial evolution aren’t likely to be as pervasive and society altering as the Industrial Revolution, but I have little doubt that it’s a significant opportunity for investors. My recommendation? Start small, and build out your position in all three over time. If one or more emerge as winners, you’ll be glad you didn’t wait. If one or more fail miserably, you’ll be glad you didn’t go “all in.”
The article A Regular Fool’s Retirement Portfolio: The Industrial Evolution originally appeared on Fool.com and is written by Jason Hall.
Jason Hall owns shares of 3D Systems Corporation (NYSE:DDD), Stratasys, and The ExOne Company. The Motley Fool recommends 3D Systems, Stratasys, and The ExOne Company. 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. Jason is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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