Why not? Well, to begin with, at 72 times and 80 times earnings, respectively, I simply don’t believe the stocks will earn their way into their valuations any time soon (or any time not soon, either). More importantly, though, the main reason so far that investors have been willing to pay through the nose to own a piece of these companies is because there weren’t any other companies to buy in the alternative. 3D Systems Corporation (NYSE:DDD). Stratasys, Ltd. (NASDAQ:SSYS). That was basically it for opportunities to invest in 3-D printing. If you wanted a piece of the action, you had to pay up for it.
No more. Now that ExOne Co (NASDAQ:XONE) and Massive-D have arrived on the scene, there finally are alternatives — and I expect them, and perhaps more credible competitors to follow, to begin siphoning away the enthusiasm for 3D’s and Stratasys’ overpriced equities. For now, I see only one direction for these stocks to go, and that direction is down.
Next in line
Who’s most likely to present a credible threat to Stratasys, Ltd. (NASDAQ:SSYS) and 3D Systems Corporation (NYSE:DDD), and at a more reasonable price? The future’s uncertain, but if I had to lay odds, I’d keep a close eye on Hewlett-Packard Company (NYSE:HPQ). The company’s no longer allied with Stratasys, true. But it was once, and has presumably gained some understanding of the 3-D printing process from its association with the upstart.
Meanwhile, no one knows printing, and the economics of it, better than H-P. Hurting for growth opportunities as its core “2-D” printing and PC businesses sag, I wouldn’t be a bit surprised to see Hewlett-Packard take a second look at the 3-D printing industry as a way to buck up its fortunes.
An acquisition or two in the industry — maybe targeting popular, privately held MakerBot? — could add a proverbial 800-pound tech gorilla to the mix here. And with H-P shares currently selling for less than six-times forward earnings, I suspect a move into the industry would win H-P a lot of fans among individual investors, and do more than a little damage to the popularity of stocks like 3D Systems and Stratasys, which up until now, have had this game all to themselves.
The article This Just In: Upgrades and Downgrades originally appeared on Fool.com.
Fool contributor Rich Smith has no positions, short or long, in any of the stocks mentioned above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he’s currently ranked No. 314 out of more than 180,000 members. The Motley Fool recommends 3D Systems and Stratasys. 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.
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