In 2022, most investors have been eager to sell off their more aggressive assets. By way of example, consider that while the broader S&P 500 is down a little over 20%, we can see a big divide in the kinds of stocks that are falling and those that are hanging tough; top utility or consumer staples sector ETFs are down only about 10% this year, while the average technology sector fund is down closer to 30%.
With that in mind, it must be noted that it is risky to dive headfirst into a dynamic and growth-oriented investment area like 3D printing stocks right now. However, with dirt-cheap valuations and continued long-term upside for this fascinating manufacturing model, it could be wise to start looking around for bargains. After all, consumer staples and utilities may be a good place to hide out in the next few months but won’t provide the long-term growth that many investors are looking for.
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In case you’re unfamiliar with 3D printing, the term is simply a fancy way to refer to “on-demand” manufacturing. Instead of printing out a two-dimensional pamphlet or a picture on ink and paper, you’re simply using specialized design software and manufacturing equipment to cut or assemble materials into real goods or parts. One of the most compelling applications of this technology is the use of 3D printers by aid groups like Enabling the Future to provide cheap prosthetics for disabled children in poor corners of the world, offering custom devices cheaply and quickly.
Beyond the narrative, however, investors should be interested in the numbers. A recent report estimates that the 3D printing market is expected to grow from about $11.5 billion in 2020 to $47.5 Billion by 2028 — a compound annual growth rate of roughly 20%.
There is always risk in any investment, so buyer beware — particularly in a challenging market environment. But if you’re interested in 3D printing applications or the growth potential of these businesses, here are six of the best 3D printing stocks to buy:
— Proto Labs Inc. (ticker: PRLB)
— Desktop Metal Inc. (DM)
— Stratasys Ltd. (SSYS)
— Nano Dimension Ltd. (NNDM)
— Materialise NV (MTLS)
— 3D Systems Corp. (DDD)
Proto Labs Inc. (PRLB)
Proto Labs is a roughly $1 billion “digital manufacturer” of custom prototypes as well as offering on-demand production of parts using 3D printing, laser cutting and computer imaging technologies. The Minnesota company was established back in 1999, and has evolved to keep up with the most cutting-edge processes (if you’ll pardon the pun).
PRLB’s evolution from a more traditional fabricator to a 3D printing stock means that it can participate in the upside of this technology but also rely on existing business and customer relationships. As a result, it’s comfortably profitable on top of plotting forward growth; earnings per share should grow from $1.55 last year to $1.67 this year and then $2.04 in fiscal 2023. Thanks in part to these financials, the stock is only down about 10% this year through June 17, while the broader S&P 500 has crashed roughly twice as hard.
In 2021, Proto Labs acquired the Netherlands-based Hubs in a deal worth $280 million to bolster its 3D printing partner network. That should ensure the growth continues in the years ahead for this dynamic stock, too.
One of the smaller names on this list, DM is valued at just $700 million. And part of the reason for that modest valuation is that shares of Desktop Metal have declined more than 50% so far in 2022 — with the majority of the pain coming after its release of first-quarter earnings that hinted at concerns about the firm’s P-50 production system.
DM is a great example of the promise as well as the risks associated with 3D printing stocks. The company is a computer hardware company focused on “additive manufacturing technologies” for engineers, designers and producers worldwide. This includes small-scale Studio System technologies as well as the potential for mass production runs. In fiscal 2022, revenue is set to grow by more than 120%, and another 34% increase in the top line is expected in fiscal year 2023. The company is still burning cash however, and fears of higher borrowing costs along the
Desktop Metal Inc. (DM)
that could create headwinds has weighed heavily on the stock.
This is assuredly a high risk investment in the space, but if you want a 3D printing stock that is showing impressive expansion right now then Desktop Metal could still be worth a look after its recent declines.
DMrisk of a recessionOne of the older and more respected names in 3D printing, Stratasys is the brand behind the Makerbot and related Thingiverse community of 3D-printing schematics.
The company is running consistently in the black, with projections of roughly double-digit revenue growth both this year and next. Shares have suffered with the rest of Wall Street this year, but more concerning is that they are down an ugly 58% from their short-lived 2021 peak, as of June 17.
That’s in part because Wall Street was a bit disappointed with the buying spree Stratasys has been on lately. Specifically, in early 2021 it announced it acquired large-frame industrial stereolithography company RP Support for $150 million but predicted it would only slightly benefit the firm’s growth plans given the specialized nature of this business line.
This has been a habit for SSYS as the firm has been around since 1989 and has grown steadily via and partnerships over the years. A few of the bigger ones include deals with Objet, Solid Concepts, Massivit 3D and Inkbit among others. Over time these deals could pay off, but there’s clearly risk here as Stratasys attempts to roll up competitors and carve out a leadership position in the sector.
Stratasys Ltd. (SSYS)
SSYSAnother smaller and as-of-yet unprofitable 3D printing stock is Nano Dimension. The company is acquisitions-listed, but is all potential as it is very much a startup in this sector.
To illustrate this, consider that in the third quarter of fiscal 2021, Nano Dimension reported its revenue more than doubled year over year thanks to higher sales of its DragonFly 3D printing systems and Fabrica 2.0 micropart machines. Now also consider the company is only projected to book about $5 million in revenue this year — yes, five with no zeroes after it.
Projections for fiscal 2022 revenue are more than $41 million, which would be a phenomenal percentage increase. But obviously that’s from a low base, with not a lot of wiggle room if things go wrong.
NNDM has crashed more than 60% in the last 12 months as Wall Street has gone decidedly “risk off.” But if you’re adventurous, this startup is a way to get in on the ground floor of a 3D printing stock that has high risk but high potential rewards.
Nano Dimension Ltd. (NNDM)
NNDMRoughly $800 million 3D printing stock Materialise provides software and support for 3D printing with specific Nasdaq applications as its specialty. The company traces its roots back to Belgium in the early 1990s, where it focused first on medical technology and 3D imaging of the human body. In the 2000s, it inked a major contract with a hearing aid provider to provide custom, on-demand manufacturing of these devices based on the specific needs of individual patients — and the rest is history.
Materialise might seem like it would be one of the more stable stocks on this list, with steady double-digit revenue growth and consistent, if modest, profitability. However, it too has taken it on the chin in 2022 with declines of more than 44% year to date, as of June 17.
However, if you want a long-term play on 21st century high-growth then maybe it’s worth giving MTLS a look after its recent declines. It serves medical device companies, hospitals, universities and research institutes, so theoretically it’s not as tied to cyclical trends in manufacturing as some of the other names on this list.
Materialise NV (MTLS)
Last but not least, DDD is perhaps the best-known 3D printing stock on this list in part because of its obvious name. But the $1 billion company is perhaps the riskiest of the group in many ways.
For starters, 3D Systems has declined by more than 50% this year to match or exceed the declines of its peers, as of June 17. Furthermore, it is struggle to say above breakeven based on the most recent financials, with an earnings estimate of a mere penny per share this fiscal year. Worst of all, revenue actually is set to decline year over year for the company.
The details matter here, however. 3D Systems’ revenue is in decline in part because it’s selling off non-core assets — and when you exclude the parts of the business that were divested, core revenue actually grew 10% year over year in the most recent period.
That said, it’s always a gamble to bet on a company in a dynamic industry and doubly so on a company that is going “all in” during a time of extreme volatility instead of relying on legacy assets to smooth things out. Still, if you want to play the 3D printing revolution, then this stock is a leader to consider.
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6 of the Best 3D Printing Stocks to Buy originally appeared on usnews.com
Update 06/21/22: This story was published at a previous date and has been updated with new information.
