This New Trend in Printing a Boon for Tech Investors?
Wednesday, October 23rd, 2013
By Mitchell Clark, B.Comm. for Profit Confidential
All kinds of companies are listing on the stock market and one of the hottest sectors remains three-dimensional (3D) printing. This is an investment theme with real staying power and a sector that every risk-capital investor should be scrutinizing at this time.
One of the stock market’s hottest initial public offerings (IPOs) this year is voxeljet AG (VJET), which is a German manufacturer of industrial 3D-printing systems. This small but growing micro-cap recently sold 6.5 million American depositary shares (ADS) for $13.00 each, raising $64.5 million after fees. The rest of the proceeds went to selling shareholders.
On its first day of trading last week, the position opened at approximately $24.50 and is now near $39.00. This incredibly strong action reveals just how attractive 3D printing is becoming to the eyes of institutional investors. It’s definitely a bright spot for stock market traders. A whole new industry is being formed right now.
Voxeljet is the latest IPO related to 3D printing, following The ExOne Company (XONE). We looked at ExOne recently after the position pulled back on the stock market. The company’s shares experienced a strong reversal at the beginning of October and are now settling around the $50.00 mark. (See “Wall Street Lowered Expectations for This Stock, But It Got NASA’s Attention.”)
Wall Street expects ExOne’s sales to grow an average consensus of approximately 68% to $48.0 million this year. Sales are expected to grow another 50% in 2014, as the company turns profitable.
There are still only a handful of 3D-printing companies that trade on the stock market. There is 3D Systems Corporation (DDD), out of Rock Hill, South Carolina. And then there’s also Stratasys Ltd. (SSYS), out of Eden Prairie, Minnesota, whose 3D-printing machines are used to create prototype parts, mostly serving the manufacturing sectors, including automotive, aerospace, computer, and defense customers.
In terms of stock market performance, 3D Systems has outperformed the group. The stock is very pricey, but it illustrates the desire that investors have to bid up this developing industry.
In the company’s second quarter of 2013, total revenues grew 45% to $120.8 million. Earnings grew to $9.3 million from $8.3 million, but earnings per share declined a penny.
The company has lots of cash in the bank and describes demand for its 3D-printing machines and related supplies as “heavy.” The company’s third-quarter results are due next week, and the Street expects the company’s numbers to grow at about the same pace as the second quarter.
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For the most part, 3D printing is being used in industrial applications, but the transition to the retail market is highly likely. There’s plenty of time before 3D printers seemingly will become commoditized; therefore, there should be some good stock market returns to be had.
There is a fair amount of new IPO activity currently. With the stock market at an all-time record high, it is a good time for companies to be selling shares.
A number of IPOs recently hit the stock market and were bid well above their offering prices. There is an appetite in this market for new stories; 3D printing is one of them, and it’s a growth industry that investors may want to consider, as it should continue to produce excellent returns.
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