When I talk about 3D printing materials, I remember an article from Harvard Business Review (The 3-D Printing Revolution) published in May 2015. The article talked about industrial 3D printing at a turning point.
According to the article, sales of industrial-grade 3D printers in the US were already a third of sales of industrial automation and robots. History, which relates to the data from the previous year, predicted an increase to 42% by 2020.
It finally seems that the 3D printing industry has come of age.
Some numbers estimate that the 3D printing market will grow at an annual growth rate of 29.48% between fiscal 2018 and fiscal 2026. Another estimate assumes a market size of 34.8 billion US dollars by fiscal year 2024.
Growth clearly seems to be gaining momentum in the 3D printing industry, and there are some attractive investment opportunities.
Let’s talk about four 3D printing materials that can add value as industry growth accelerates over the next few years.
- Stratasys (NASDAQ:SSYS)
- Exon (NASDAQ:XONE)
- Proto Labs (NYSE:PRLB)
- voxeljet AG (NASDAQ:year)
4 of the Best 3D Printing Materials of 2021: Stratasys (SSYS)
Source: Lutsenko_Oleksandr / Shutterstock.com
After peaking at $ 56.95, SSYS stock has cooled down and is currently trading just above $ 27. SSYS stock is among the top stocks in the 3D printing business, and it seems to me that the current levels are attractive for exposure.
Earlier this month, Stratasys reported fourth quarter results for 2020. The company beat estimates with a surprise profit of $ 0.13 per share. In addition, the forecasts for the first two quarters are largely in line with the analysts’ estimates.
Beyond the short-term sales or earnings outlook, I am optimistic about the company’s innovation and diversification. For example, the company recently unveiled a 3D printer to meet growing demand in the dental industry.
Likewise the takeover of RP support will help gain a foothold in the industrial stereolithography 3D printer and solution segment. It’s worth noting that 3D printing solutions have applications in industries such as aerospace, automotive, and consumer electronics.
There is a large addressable market and the company’s revenue growth is expected to accelerate in the coming years.
From a financial standpoint, I like the fact that the company reported positive operating cash flow (OCF) of $ 27.8 million in fiscal 2020. As the OCF accelerates, the SSYS share should develop higher.
On March 3, Stratasys announced a public offer for gross proceeds of $ 200 million. The liquidity buffer implies that the company is fully funded for the next 12 to 24 months.
Even after correcting all-time highs of $ 66.48 to current levels of $ 32, XONE stock is up 591% on an annualized basis.
Government and defense customer revenues have increased six times since fiscal 2009. If ExOne can continue to secure government contracts, this will be a large addressable market in its own right.
Additionally, there could potentially be large government contracts adding to the company’s backlog. As of the fourth quarter of 2020, the company reported an order backlog totaling $ 39.4 million.
From a growth perspective, ExOne is an innovator with 230 patents issued and pending worldwide. General industrial and automotive sectors are the other large markets for the company. It is likely that revenue will continue to accelerate.
For the second half of fiscal 2020, the company posted robust sales growth of 20%. In the current year, sales growth should be between 15% and 25%.
On the other hand, the company continues to show losses on an operational level. Cash flow from operating activities was $ 13.8 million for FY2020 compared to $ 5.3 million for FY2019. It remains to be seen whether the company can achieve improved margins this year.
When it comes to cash burn, it is important to look at the liquidity profile. In December 2020, the company reported a cash buffer of $ 59.7 million.
Additionally, the company received $ 95 million in net proceeds from the public offering in February 2021. Liquidity is not an issue, but the company needs to deliver on the margin front for XONE stock to trend higher.
3D printing materials: Proto Labs (PRLB)
PRLB stocks are probably among the most attractive names in 3D printing. However, it makes sense to gradually accumulate using stock trading with a forward price / earnings ratio of 65.1.
At a glance, Proto Labs is a manufacturer of customer-specific components. The accelerated production of these customer-specific components takes place with the help of automated 3D printing. I would call this next generation manufacturing, where custom parts can be made in just 24 hours.
The company’s largest customer base is in the healthcare and computer electronics industries. However, the company also serves the aerospace and automotive industries.
For fiscal 2020, the 3D printing segment generated revenue of $ 61.4 million, an increase of 15% over the previous year. Injection molding and CNC machining are other important segments of the company.
Proto Labs acquired in January 2021 3D hubs, an online manufacturing platform. This acquisition should accelerate sales growth. For fiscal 2020, 3D Hubs reported sales of $ 25 million. The company’s sales have increased by 200% since the 2017 fiscal year.
Overall, PRLB is an attractive long-term bet. However, valuations appear to be stretched and another correction is likely. It also makes sense to look for revenue growth acceleration before getting a large exposure to the stock.
voxeljet AG (YEARS)
VJET Stock is a small-cap name in the 3D printing industry. The stock is currently trading with a market capitalization of $ 96 million. The stock was already up 198% last year. A positive tailwind in the industry can mean further upward movements.
At a glance, voxeljet AG concentrates on large-scale series 3D production. To his credit, the company has long-term relationships with a number of blue-chip customers, including one BMW (OTCMKTS:BMWYY), Nike (NYSE:OF), ford (NYSE:F.) and Daimler (OTCMKTS:I’m going), among other.
It’s worth noting that the company’s business comes from sectors such as automotive, aerospace, and heavy machinery, among others. However, voxeljet AG is looking for new business applications in the areas of consumer goods, electronics and services. Entering new markets can help accelerate growth.
In addition, the company is marketing its large production polymer 3D printer VX1000 HSS this year. A growing order book can trigger an upward movement in the VJET share. Overall, the small-cap stock is attractive for some exposure. If the company can achieve steady growth, VJET stock can be a potential portfolio catalyst.
At the time of publication Faisal Humayun held positions (neither directly nor indirectly) in any of the securities referred to in this article.
Faisal Humayun is a senior research analyst with 12 years of industry experience in credit analysis, stock analysis, and financial modeling. Faisal has authored over 1,500 stock-specific articles focusing on the technology, energy and natural resources sectors.