Pat McKeough responds to many requests for stock market advice and other questions on investment and the economy from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle.
This week, an Inner Circle member asked us a question about a stock whose prospects depend on the continued growth of 3D printing. Pat looks at the company’s attempts to spur further growth by aggressively promoting the sale of 3D home printers and by convincing industrial clients to adopt 3D printing.
Q: Hi Pat: What do you think the future holds for 3D Systems Corp.? Thanks.
A: 3D Systems Corp., (symbol DDD on New York; www.3dsystems.com) designs, develops, makes and services 3D printers and related products. The company’s main operations consist of stereolithography (or 3D printing), modelling, film transfer imaging, selective laser melting and plastic jet printers.
In the three months ended December 31, 2012, 3D Systems’ revenue rose 45.4%, to $101.6 million from $69.9 million a year earlier. Excluding one-time items, earnings per share rose 44.4%, to $0.26 from $0.18 (adjusted for a 3-for-2 split in February 2013). 3D Systems holds cash of $155.9 million, or $1.69 a share, and has low debt.
3D Systems continues to report higher sales and earnings. At the same time, it is using acquisitions to add new applications and technologies. For example, it recently bought Geomagic Inc. for $55 million. This company makes 3D design, sculpting and scanning software tools that are used to create 3D content and inspect products throughout the entire design and manufacturing process.
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Company aggressively promotes new home 3D printer at starting cost of $1,400
3D Systems is aggressively promoting its new Cube at-home 3D printer, which can print 3D objects, such as cell phone cases or toys, in plastic. The Cube costs as little as $1,400, and users can buy one kilogram of plastic printing materials for $79.
The company has a close competitor in Stratasys (Nasdaq symbol SSYS).
The stock is down 25% from a high of $47.99 in late January 2013. It could rebound and move higher as investors look to invest in this new and promising technology. However, even after the price drop, the stock trades at 30.7 times this year’s forecast earnings of $1.12 a share.
In the Inner Circle Q&A, Pat examines the company’s prospects for a share rebound as well as the outlook for 3D printing. He concludes with his clear buy-hold-sell advice on the stock.
COMMENTS PLEASE—Share your investment experience and opinions with fellow TSINetwork.ca members
Do you think a stock that is looking to create a strong niche in a still-evolving technology like 3D printing is a good investment? Do you have a specific example of a stock like this that paid off? Do you have an example of one that failed to deliver on its initial promise? Let us know what you think.
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