Why settle for a paltry 10% return on an oil and gas stock when you could earn north of 50% by putting your money on 3D printing? Motley Fool writer Robert Zimmerman boldly asserts that additive manufacturing stock is poised to “smoke” oil and gas profits, and we kind of agree.
Aptly pointing out additive manufacturing heavy-hitter 3D Systems’ eye-popping year-over-year results (revenues were up 57%; gross profits were up 69%; diluted EPS rose a whopping 78%), Zimmerman makes a strong case for the viability of the industry. A look beyond individual company performance showed companies like General Electric and Autodesk commissioning major projects that rely on 3D printed components from companies like mid-merger bedfellows Stratasys and Objet.
And let’s not forget the reverb. Beyond the major printer manufacturers themselves are service companies like Dassault, the France-based 3D printing software, engineering and marketing services firm. Between the proven success of core and ancillary suppliers–not to mention recent signals that industry growth will take place on a much larger scale–aren’t well-run additive manufacturing players positioned for hockey stick growth?
Mostly. Here’s the “but”: Zimmerman called it right on long-term industry growth, BUT he may have understated short-term risk. Those recent signals we just mentioned have created the kind of overexuberance that can only end one way: with temporarily overvalued stocks that take months or quarters to rationalize. In that sense, the contrast between oil and gas stocks and 3D printing stocks isn’t as compelling as Zimmerman might have you think. The comparison is classic: modest growth + short-term yield + low risk + predictability contrasts with sharp growth + uncertain yield timing + high risk + volatility.
Our advice: DO invest in additive manufacturing stocks. DO research the space thoroughly and choose companies wisely (industry consolidation has created Darwinistic conditions–winners and losers continue to emerge). DON’T look to 3D printing stocks for short terms gains for aforementioned reasons. This is a long term play that will capture explosive growth, but over several years.
And, if you invest wisely, get ready–this disruptive technology has the potential to create profits for early investors on the order of magnitude seen by early investors in Apple and IBM. How many investors aren’t attracted to bragging rights like those? (Hint: none)
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