Is Now the Time to Invest in 3D Printing Stocks?
3D Printing is one disruptive technology that has generated a great deal of excitement among investors, and for good reason. The growth of the “3D Printing Industry” is estimated by various research firms to be astonishing. Take the below excerpt from a report published by Wohlers Associates, a firm that claims to stay very close to 3D Printing:
The market for 3D printing, consisting of all products and services worldwide, grew to $3.07 billion last year, according to the new report. The compound annual growth rate (CAGR) of +34.9% is the highest in 17 years. The growth of worldwide revenues over the past 26 years has averaged +27%. The CAGR for the past three years (2011–2013) was +32.3%.
All this excitement propelled 3D Printing stock prices to very rich valuations which also paved the way for many 3D pretenders to come out of the woodwork. None of these stories have ended well so far. Fast forward to today and it seems that we’re experiencing the “trough of disillusionment” as seen in the below “hype cycle” from Gartner:
Prices of pure-play 3D printing stocks have simply plummeted over a 1-year timeframe as seen below:
These returns are so bad that they actually rival the losses you would have experienced investing in over the counter (OTC) stocks. Every single one of these 3D printing stocks except for Materialise (NASDAQ:MTLS) are trading at 52-week lows right now. It may be time to look at starting to dollar cost average into a position in all 5 of these pure play 3D printing stocks. It’s too tough to try and figure out which company will outperform all the others, but by buying all 5, you’ll enjoy the benefits of diversification and still get exposure to 3D printing.
If you think now is the time to begin getting some exposure to 3D printing, here’s what you can do. Motif is a great platform that we wrote about before and which we actually use ourselves for disruptive technology investing. Then buy the above Motif called “Nanalyze 3D Printing Stocks” which is a market-cap-weighted index that allows you to buy a basket of all 5 pure-play 3D printing stocks for just $9.95 per trade. But even after buying this diversified basket, expect your returns to be volatile. Since we created this motif, it’s down -15% and has lost -13% in the past month alone. Over time, we’ll maintain the motif and re-balance every six months to reflect any corporate events or new entrants. The only stock you’ll then be missing is Arcam.
Arcam is a 3D printing metals company that trades on the Stockholm exchange in Swedish Krona (STO:ARCM) and also on the OTC market as an ADR (OTCMKTS:AMAVF). The stock has performed well over time, though over the past year has suffered losses of around -32% . If you have an account with Interactive Brokers, you can just buy ARCAM in SEK and enjoy some additional currency diversification as well. But be aware of these additional risks. The Swedish Krona has lost -20% of its value against the U.S. dollar over the past year. Should the dollar weaken or the SEK strengthen, then this currency play would benefit your portfolio.
So is now the time to invest in 3D printing stocks? While few people get rich trying to time the market, there’s no question that current valuations are at a more attractive level, especially given the growth potential of 3D printing. Now is a good time to start building a position while at the same time keeping a close eye on potentially disruptive new entrants such as Hewlett-Packard (NYSE:HPQ) or startup Carbon 3D which is backed by Autodesk (NASDAQ:ADSK) and is looking to 3D print at 1000X the speed of current technologies.
Here at Nanalyze, we hold the lion's share of our investing dollars in a portfolio of 30 dividend growth stocks. Find out which ones in the Quantigence report freely available to Nanalyze subscribers.