Like many other speculative investment themes in 2013, the 3-D manufacturing sector has been on fire this year. For the uninitiated, check out this great 6 minute video from the Economist, by way of the Global Macro Monitor blog.
3-D manufacturing is here to stay. Investors are currently flying blind though, speculating on the potential winners and losers well before business models, client relationships, and product innovation have really taken shape. Of course, the long-term winners won’t be known for many years. For now, a rising tide is lifting all boats, as evidenced by the charts of the largest 3-D stocks.
First, DDD, the largest market cap stock in the space (over $7 billion). The stock really got going at the start of 2012, and has traded above its rising 200 day moving average for almost the entire period since:
The chart of SSYS, a peer 3-D printing manufacturer (slightly smaller, around $6 billion market cap), is not too different:
However, SSYS clearly is the less volatile of the 2 peers. It is also less controversial, as DDD has 20% short interest (even after its huge run), while SSYS has only 5% short interest.
DDD and SSYS are companies that have been public for more than 20 years, and are currently profitable. These are real businesses that were fortunate to see technology has finally catch up with their niche, making it available to a mass market. Hence the huge moves in the past 2 years.
Meanwhile, the excitement has spread to smaller newcomers who have IPO’ed in 2013, like XONE and VJET. Those stocks have been veritable casinos, rising more than 100% and falling 40-50% in short order.
We have followed the sector from afar, fascinated by the price action and the macro story more than anything else. We plan on digging into the fundamentals of the individual companies in the coming months in order to sort out which of these companies are most likely to be the major long-term winners. As always, to the winners go the spoils.