3D printing investing can be risky. Here’s how to invest in 3D printers without getting tied to major players.
Once at the top of its game, the 3D printing market has recently showed signs of stress. Major player 3D Systems (NYSE:DDD) announced the discontinuation of Cube, its entry level 3D printer, while Stratasys’ (NASDAQ:SSYS) MakerBot saw a wave of layoffs last year.
Given those issues, some investors are wary of investing directly in the 3D printing market. However, there are alternative means of supporting this industry. Here, the Investing News Network explores how to invest in 3D printing through the backdoor — in other words, by buying into more diversified companies, or companies that manufacture 3D printer components.
Investing in 3D printer components
IPG Photonics (NASDAQ:IPGP) develops and manufactures fiber lasers, fiber amplifiers and diode lasers. The Massachusetts-based company sells its products to original equipment manufacturers, system integrators and end users through a direct sales force.
The company’s products are used in cutting, welding and marking in the automotive, industrial and consumer electronics end markets. An Oppenheimer equity research report from Holden Lewis and Kristen Owen identified the company as the “dominant player in a technology — fiber lasers — that has grabbed, and should continue to grab, share.”
According to the report, IPG’s play on the growing secular adoption of fiber lasers in the global cutting, welding and engraving markets could make it the main beneficiary of fiber’s growing position within the metals processing market. While fiber occupied around 38 percent of the market in 2014, it has jumped to become more than 50 percent of the metals processing market.
And while the company has positioned itself as the dominant producer of fiber lasers, it is also looking to invest in new markets, niches and technologies. That is where 3D printing comes in. According to Oppenheimer, “IPG is even a back-door play on metal 3D printing. If it executes effectively — and it has a great track record — it should sustain industry-leading growth over our forecast horizon.”
Accordingly, IPG’s fibers could have a significant impact on metals 3D printing — that means the company might be one place for investors to look if they’d like to avoid fluctuations in the core 3D printing market.
Graphene 3D Lab (TSXV:GGG) is another company focused on the development of 3D printer components. The company’s core product is a Conductive Graphene Filament that allows customers to 3D print circuitry and sensors for electronic applications. In the future, the company hopes to deepen its relationship with the 3D printing market with the development of a multi-tool 3D printer that can print an even greater range of materials than current models. As these companies illustrate, there are a wealth of 3D printing investment opportunities beyond the conventional players within this niche market.
Multinational corporations offer another alternative
Investors can look to major corporations as a way to invest in 3D printers without exposing themselves to the vagaries of the 3D printing market. For instance, an article from Fortune states that American multinational software corporation Autodesk (NASDAQ:ADSK) has a 3D printer in the works; so does Japanese multinational conglomerate corporation Toshiba (TSE:6502). Meanwhile, HP (NYSE:HPQ) is another major multinational player with its Multi Jet Fusion printers.
With market caps in the billions and trillions of dollars, these companies won’t be substantially affected by the cyclical nature of the 3D printing market. They may thus also present a viable alternative for investors wondering how to invest in 3D printers through the backdoor.
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This article was originally published on 3D Printing Investing News on January 4, 2016.
Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.