We recently compiled a list of the 7 Best Nanotech Penny Stocks to Buy. In this article, we are going to take a look at where 3D Systems (NYSE:DDD) stands against the other the Best Nanotech Penny Stock to Buy.
Market Outlook and Investment Opportunities
The Federal Reserve’s recent half-point rate cut is expected to benefit small-cap stocks more than large-caps due to their floating-rate debt. Oxford Economics analysts believe small caps could thrive in easier economic conditions and with reduced borrowing costs. Eduardo Lecubarri of J.P. Morgan sees a “generational opportunity” in small to mid-cap stocks, emphasizing the importance of selecting stocks with pricing power and achievable earnings growth. With the economy stabilizing, small to mid-cap stocks offer significant investment potential.
Investors should brace themselves for further gains even as market indices flirt with record highs. Those are sentiments echoed by analysts at Goldman Sachs, who are confident of the S&P 500 powering through the 6,000 level. Earnings growth and a favorable interest rate environment are some of the factors that should lift the market heading into the year-end.
“Our forward EPS estimates reflect a steady macro outlook,” chief U.S. equity strategist David Kostin wrote. “The macro backdrop remains conducive to modest margin expansion, with prices charged outpacing input cost growth.”
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The sentiments come amid growing concerns that valuations are increasingly getting out of hand. After one of the longest Bull Runs, fueled by a resilient US economy, artificial intelligence, and earnings growth, most stocks are trading at a premium.
Nevertheless, most analysts believe there is still room for more gains as the investment environment improves. While the tech trade lost some steam over the summer, the market is still open to risk-reward opportunities, especially when counters are trading at highly discounted valuations. The tech industry rose by a partial 2.6% in the third quarter, lagging the S&P 500, up 5.5%, which signals the need to look into other sectors for investment opportunities.
While it’s becoming increasingly clear that the fourth industrial revolution will be spearheaded by artificial intelligence, robotics and quantum computing breakthroughs, nanotechnology is an emerging field that presents tremendous investment opportunities.
Nanotechnology’s Impact and Future Potential
Nanotechnology is revolutionizing industries globally, with significant applications in biomedicine, such as novel diagnostic tools, drug delivery systems, and vaccines, driven by rising chronic diseases. It also enhances clean energy through nanofluids for solar connectors and advances carbon capture with carbon nanotubes. Additionally, nanotechnology improves food security with nanoparticle-based fruit coatings, highlighting its essential role in future technological advancements.
Recent nanotechnology innovations include oxygen-releasing cryogels for tissue repair, gold liposomes for brain cancer treatment, DNA origami for optical metamaterials, stable multi-nanoemulsions, hacky sack-like nanoparticles for drug delivery, 3D cell culture structures, silicon nanoparticles for EV batteries, nano-vault silicon anodes, fireproof nanomaterials, and graphene nanoribbons for advanced nanoelectronics. Thanks to nanotechnology, several industries are undergoing a revolution that focuses on modifying atoms and molecules to produce products used in various industries.
While investors are still cautious about abandoning the tech trades that have generated significant returns over the past year, nanotech stocks trading for pennies promise to generate significant long-term returns as most are trading for pennies.
“In the third quarter we definitely saw that rotation and some of the tech leaders lagging. In the month of September alone, though, it kind of reversed a bit. … I think that particular rotation out of the big momentum stocks maybe didn’t finish the quarter as strongly as it started,” said James Ragan, director of wealth management at DA Davidson.
The global nanotechnology market, valued at $1.76 billion in 2020, is projected to reach $33.63 billion by 2030, growing at a CAGR of 36.4%, according to estimates from Allied Market Research. Key segments like the graphene market, valued at $175.9 million in 2022, are expected to grow at a 46.6% CAGR, while the lipid nanoparticle market, valued at $777.4 million in 2022, is set to grow at 13.6% CAGR through 2029.
Despite challenges like high costs and performance issues, increased government support and innovative self-powered devices offer promising opportunities, with significant research activity in the US, UK, Europe, and Asia-Pacific. The US government, through the National Nanotechnology Initiative (NNI), coordinates nanotech work across 19 agencies, aiming to enhance the economy, security, and quality of life. With a 2004 budget of $961 million, including $80 million from NIH and $2.5 million from NIEHS, the NNI supports basic and applied research, technology transfer, and understanding of social and environmental impacts. It promotes interdisciplinary research through 16 centers of excellence and programs like SBIR and STTR.
With this outlook in mind, let’s explore the best nanotech penny stocks to buy.
Our Methodology
We conducted thorough manual research to compile the list of the best nanotech penny stocks to buy. We selected nanotech stocks from various nanotechnology-focused ETFs, including ProShares Nanotechnology ETF (TINY), Global X Nanotechnology ETF (NANO), ARK Innovation ETF (ARKK), and SPDR S&P Kensho Intelligent Structures ETF (SIMS). We selected stocks trading under $5 per share with substantial exposure to nanotechnology. The stocks are ranked in ascending order based on their share price value.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
3D Systems (NYSE:DDD)
Share Price as of October 7: $3.06
Number of Hedge Fund Holders: 15
3D Systems (NYSE:DDD) is one of the best nanotech penny stocks to buy as a leading 3D printing and digital manufacturing solutions provider. It is one of the companies that has benefited from the 3D printing industry, experiencing tremendous growth thanks to ongoing research and development that improves the technology.
Scientists are currently developing micro and nanoscale manufacturing techniques due to the overwhelming interest in 3D printing. In the realm of nanoscale 3D printing, the goal is to 3D print objects measured in nanometers.
With the use of this technology, objects can be assembled atom by atom, marking a promising advancement in additive manufacturing. Nanoscale technology can potentially improve productivity and efficiency across a range of industries, including semiconductors, medical devices, batteries, and nanorobotics, microelectronics, and sensor technologies. These industries stand to gain much from the accuracy-preserving precision of nanoscale creation.
3D Systems (NYSE:DDD) is already positioning itself for opportunities as the nanotechnology market expands. It is already expanding its footprint into the expanding market of 3D printed teeth and their alignment protection dent repair. It has already inked a $250 million contract to support the manufacturing process of clear aligners.
While 3D Systems (NYSE:DDD) delivered disappointing second-quarter results, with revenues dropping 12% year over year at $113 million, it continues to register significant growth in service revenues. Additionally, its net loss shrunk to $27.3 million from $29 million a year ago. The company expects its full-year revenue to range between $450 million and $460 million.
As of the second quarter, 15 hedge funds have taken a bullish stance on the stock, collectively holding shares valued at $18.18 million. ARK Investment Management is the largest shareholder in 3D Systems (NYSE:DDD), holding $9.45 million worth of stock as of June 30.
Overall DDD ranks 1st on our list of 7 Best Nanotech Penny Stock to Buy. While we acknowledge the potential of DDD as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DDD, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.