Why NNDM Stock Is Worth Looking at Right Now
The S&P 500 is only down by seven percent from its record high, but about half of the stocks in the index are trading below their respective 200-day moving averages. There are many stocks trading 50% below their highs, which means there are plenty of opportunities for contrarian investors.
Outside the S&P 500, there are boatloads of stocks trading at mere fractions of their highs. That’s the situation with Israel-based 3D printing technology company Nano Dimension Ltd (NASDAQ:NNDM).
Nano Dimension stock is down by 70% from its 52-week high and down by a whopping 97% from its 2016 levels.
While NNDM stock’s initial spike in 2016 was clearly excessive and driven by euphoria about the 3D printing industry, the subsequent selling has been equally excessive in my view, given how much the company’s balance sheet holds in cash. (Source: “Nano Dimension Ltd. (NNDM),” Yahoo! Finance, last accessed April 22, 2022.)
Chart courtesy of StockCharts.com
Nano Dimension Ltd held $1.4 billion in cash and $3.6 million in debt at the end of December 2021. This implies cash of roughly $5.32 per share and a book value of $5.74 per share, which are both well above the current $2.90 price of Nano Dimension stock.
My view is that the 3D printing tech sector will have a reawakening as companies develop innovative products that can be produced using 3D printing.
One study valued the global 3D printing market at $13.8 billion in 2021 and said it could grow at a compound annual growth rate (CAGR) of 20.8% from 2022 to 2030. (Source: “3D Printing Market Size, Share & Trends Analysis Report,” Grand View Research Inc, last accessed April 22, 2022)
Nano Dimension Ltd is still in its initial stages as far as revenues go, but the company’s large cash balance will allow time for management to execute their plans.
Consider that the company reported a mere $3.4 million in revenues in 2021. Analysts estimate that Nano Dimension Ltd will report revenues of $5.0 million this year and $41.2 million in 2023. (Source: Yahoo! Finance, op. cit.)
Since the company is in still its initial stages, it’s years away from generating profitability or positive earnings before interest, taxes, depreciation, and amortization (EBITDA).
Paying almost nothing for the assets of Nano Dimension Ltd is a compelling opportunity that should interest contrarian investors.
Consider that ARK Investment Management LLC—managed by Cathie Woods, who’s known for her vision regarding future technologies—holds 18.9 million shares, or 7.6% of NNDM stock. (Source: Yahoo! Finance, op. cit.)
The key for Nano Dimension stock investors is the company focusing on growing its revenues, which its strong cash position should allow.