3D Printing Stocks, 3D Printing Values and 3D Printing Investments – How to Choose?
Competitive: With the 3D printing industry attracting more interest and having recently experienced over 34% growth in 2013, the competition is intensifying. Companies with deep pockets, start-ups, and even governments around the world are stepping up their 3-D printing investments in an effort to get a piece of the action. When Stratasys’ (NASDAQ: SSYS ) patents around its fused deposition modeling 3-D printing technology expired, it acted as a catalyst that sparked the consumer 3-D printing movement. Ultimately, it led to Stratasys purchasing MakerBot, the leading consumer 3-D printing company as a way to gain an entrance into the consumer segment and defend its market positioning.
Valuation: 3-D printing stocks are by no means cheap, and they can be extremely volatile at times. Shares of ExOne (NASDAQ: XONE ) are down 42% year to date and still trade at high valuation on paper. While ExOne’s management has admitted that its transition from catering to foundries to direct manufacturers will likely take time to play out and should ultimately expand its addressable market, investors aren’t often known to give emerging growth companies like ExOne the benefit of the doubt.
After taking into account the challenges facing the industry as a whole, as well as a complete understanding of the risks associated with each 3-D printing company, it’s time to consider portfolio allocation. Given the overall risks associated with 3-D printing investing, 3-D printing specialist Steve Heller and Motley Fool industrials bureau chief Blake Bos believe a small total allocation may only be warranted for those who can tolerate only the highest degrees of risk.
Do you buy a basket of 3-D printing stocks, perhaps comprised of 3D Systems, Stratasys, and ExOne, with the total basket comprising of no more than 5% of an investor’s total portfolio? Although 5% may seem like a small allocation, the 3D printing industry is changing, leading to uncertainty from which companies will ultimately emerge victorious. It’s difficult to say whether 3D Systems and Stratasys will remain the biggest names in 3-D printing decades from now or if ExOne can in fact disrupt the foundry industry’s business model. And let’s not forget about HP or IBM…..