Stocks For Speculative Investors [3D Systems Corporation, Stratasys, Ltd.]

in focus spotlightMitchell Clark:  Looking for volatility? Stick with 3D (three-dimensional) printer stocks. While most continue to exude upward price momentum, valuations are off the charts and the action can only be described as “gut-wrenching.”


Stratasys Ltd. (NASDAQ:SSYS) is a company we looked at back in November. Based out of Eden Prairie, Minnesota, Stratasys is one of the leading manufacturers of 3D printers. (See “In Spite of Hype, New Tech Sector Not a Fad.”)


The company’s share price is up six-fold since October of 2011, but it recently experienced its first blip in expectations. The stock dropped $15.00 a share, or about 11.5%, after reporting a 2014 earnings outlook slightly below existing consensus.


Still, this is very much a growth story, and it’s likely the company will continue to be a hot commodity on the stock market. Revenues for 2014 are expected to grow by a minimum of 25% organically.


But like many enterprises in high-growth mode, Stratasys is investing heavily in its business, hiring new sales people and spending on marketing. Combined with higher costs for research and development, total operating expenses this year are expected to rise considerably. The Street sold the position on the day of the announcement, exacerbated by the company’s extremely high valuation.


Almost twice as large as Stratasys is Rock Hill, South Carolina-based 3D Systems Corporation (NYSE:DDD). This company has been on a tear, up by more than 100% on the stock market since this time last year.


The Street expects 3D Systems to grow its sales by 45% this year and another 30% next year. Earnings aren’t forecast to grow as quickly as sales for the same reason as Stratasys: these companies are investing heavily in future operations.



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