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Our Stock Pick Of The Year 2014 – 3D Printing Company

3D Printer

An example of a 3D printer

The stock investing recommendation for the year is 3D Systems Corporation (DDD). Although this company has been around since the late 1980’s it is my belief that this company still has incredible growth potential. This is based on a number of factors.

These would include acquisitions, continued innovation and finally growth acceleration. As can be witnessed this past year, the stock price has already doubled since the summer and has increased dramatically from its 52 week low of $27.88 which was last realized at the beginning of 2013.

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I remain upbeat for 3D Systems because they show an aggressive pattern of acquisition that shows no sign of diminution. In this past month alone they acquired three consumer directed companies. These would include Gentle Giant Studios, Figulo Corporation and Village Plastics.

Gentle Giant Studios has been one of the leading suppliers of 3D modeling for the toy and entertainment industry.

For the last two decades this mainstay studio has been a leader in the development of state of the art content using the latest technology in modeling and 3D scanning. This has allowed the company to create and manufacture licensed 3D printed characters, collectibles and toys from a wide variety of franchises that include Star Wars, Harry Potter, Avatar, The Walking Dead, The Hobbit, Marvel and Disney. The acquisition will allow 3D to vastly expand its reach into the entertainment industry with many upcoming movie blockbusters, theme parks and intellectual properties that have global brand appeal.

Figulo Corporation founded in 2011 uses 3D based printing in the manufacturing of materials in ceramics. It allows a personalized production of glazed and printed ceramics to consumers on an international scale. The technology is used for artistic and architectural applications as well as home decor.

Young children through adults are now using technology developed by Figulo to allow personalized production for online market and retail operations.

Village Plastics is a manufacturer of precision in thermoplastic 3D printing filaments. The company has an wide product line and features capabilities in manufacturing that allows custom sizes, and shapes to meet the needs of an extensive list of possible customer requirements. This is possible through having facilities that allow completely customized extrusion lines in a cost effective manner. By using the latest technology the company is able to provide near perfect consistency in the made to order products it provides in plastics.

Up to this point 3D has been able to assimilate their past acquisitions to the gain of the larger corporation quite readily. It was announced in December that 3D has entered into a new collaboration with Xerox. This continues a 15 year relationship with the aforementioned company that has helped both companies maintain leadership positions in printing abilities.

Earlier in 2013 3D also acquired Phenix an important acquisition for a future foray into metals printing.

This will allow the company to produce chemically pure, fully dense metal and ceramic parts from very fine powders. Materials now include stainless steel, tool steel, super alloys, non-ferrous alloys, precious metals and alumina. The products manufactured have been used in the automotive and aerospace industries as well as patient specific medical device industries.

All of the above purchases are enhancing the capability of 3D to continue to offer state of the art innovative products. The company stated policy is to continue to absorb smaller enterprises that will allow greater creativity in more industries where this new evolving technology is going to be used.

Innovation continues to be the major focus of this company. Over the past year alone an array of new products have come to market. One can safely assume with the recent acquisitions that this trend will continue. These would include the new CubeJet and Cube Pro Printers for industry and Cube ® 3 the latest incarnation of the home printer. iSense 3D scanner another roll out will be the scanner for Apple’s (AAPL) iPad. A new collaboration has been announced with Intel Corporation to help make 3D printing and modeling the new industry standard. In addition, 3D has just disclosed the new line of ChefJet 3D sugar printers.

The company will offer two models that will allow some major innovation in what is easily achievable with pastries, cakes and confections. Out of reach of the typical consumer at five and ten thousand at the moment; new models will inevitably arrive. The long term goal will be to have such a device in every middle class kitchen This was made possible by the 3D purchase of the The Sugar Lab company last September. Will this technology allow real 3D food in the near future? Will it be at a price that is affordable to millions of potential customers? Some industry analysts say we are not far from this reality. 3D will undoubtedly lead the effort in this direction.

The strong growth in sales of new products and upgrades of previous technology has resulted in strong revenue growth for the company.

The increase in revenue growth for 2013 is as follows: 31% in the first quarter, 44.5% in second quarter, 49.9% in the third quarter, and over 50% expected for the fourth quarter.

Although one cannot expect growth rates of this magnitude to continue indefinitely one could expect for the company to continue profitability for some time to come. There may be some retrenching of the stock price in the short run perhaps 10% to 20% based on short term news. These would include expiring patents beginning in February of 2014 which will give the company more competition in this cutting edge technology. Company reports on short term reduced profitability as research and development costs mount in response, can be expected. Future acquisitions costs will also impact the stock price somewhat. However, for the long term this company is at the leading edge of a new trillion dollar industry.

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