It’s Time To Buy 3D Printing Stocks

After a tough 12 months it’s time to buy 3D printing stocks again.

You’re likely familiar with the concept of 3D printing by now. Technically known as “additive manufacturing”, 3D printing is the process of laying down successive layers of material to build objects of almost any shape.
Industrial printers use a variety of materials to “print” objects. Plastics are the most common material used, although metals and even wood are being increasingly used as printer jets and software become more sophisticated.
3D printing stocks soared in popularity over the last few years as the technology became more affordable and the companies enjoyed rapid growth.
For instance, from 2010 to the end of 2013 3D Systems (NYSE:DDD) rallied more than 2,000%. The hot market led to several public offerings for companies that had been in the game for years, though performance was mixed.
The ExOne Company (Nasdaq:XONE) rallied more than 300% after going public in late 2013, while Materialize (Nasdaq:MTLS) has fallen steadily from a high of $14 to under $10 since going public in June 2014.
While the timing of these IPOs led to significantly different returns in the months after going public, and the broad group fell on tough times in late 2014, one thing remains clear: 3D printing is not a fad, and there remains room in the industry for many companies to thrive.
The technology is reshaping manufacturing processes around the world. Use of printers is moving beyond prototyping, hobbyist use and small-scale manufacturing, and becoming a reality in full-scale production lines.
The benefit of greater speed, tighter tolerances and lower cost means that 3D printers will be fully integrated into manufacturing lines around the world within a few years.
Today, the global market for additive manufacturing is around $4 billion. Consulting firm Wohlers Associates states that in just five years, that market size is expected to swell by more than four times, to $21 billion.
Over the next few years expect to see printer prices come down, capabilities go up and material use diversify. Despite the potential, excitement over the revolutionary process has died down a bit. And so have lofty valuations for publicly traded 3D printing stocks.
It’s also safe to say that the 3D printer industry is ripe for consolidation. Over the last couple of years we’ve seen many small deals done, and I fully expect that the next two years will bring larger and larger deals.
While the 3D printing industry has come a long way from its beginning in the 1980s, it is still a very fragmented market. Traditional printer behemoths such as Hewlett-Packard (NYSE:HPQ) are just now getting into a game that is currently dominated by several smaller players.
As we move into 2015 look for 3D printing stocks to find a bottom and start rising again. Add exposure gradually by averaging in, and I expect that you’ll be well rewarded in future years.

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