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Buy or Sell: 3D Systems (DDD)

Eric Dutram

In our list of most searched for tickers so far this month, there is a surprising name in the top group; 3D Systems (DDD). This small cap firm is apparently pretty popular with investors, despite its small market cap, thanks to its innovative business line and impressive performance over the last one year period (up nearly 100%).

This surge in price is largely thanks to great earnings momentum and an enormous level of interest in the company’s main business, 3D printing. This 3D printing has been billed as a game-changer by some, and the start of a new ‘industrial revolution’ by others, so it certainly has been hyped up over the past few months.

Unfortunately for investors though, the company has fallen on some hard times and its stock price has had significant trouble in 2013. In fact, the company is now down over 15% on the year and is well off of its all-time high.

This may be viewed as a buying opportunity by some, or the last straw for others, but what about you?

Should investors be buyers or sellers of DDD here?

Reasons to Buy:

  • Stock is currently in solid company for its Zacks Industry Rank (although it should be noted there are very few companies in this segment).
  • Earnings growth is still quite impressive—projected to be 30% when compared to the year ago quarter—while the industry seems poised to surge in importance as well.
  • The current pull-back could represent a very attractive entry point for some longer-term focused investors.

Reasons to Sell:

  • The earnings estimate trend is not looking good. There are several revisions lower in the past sixty days, while the consensus has come down over the same time frame.  
  • The stock recently saw its Zacks Rank move from a 2 or ‘Buy’ to 3 or ‘Hold’. This means that the firm is becoming less favorable from an earnings estimate perspective, at least when compared to its peers.
  • The PE is relatively high—above 30—and it has been a very volatile stock. This might be a very potent mix if markets start to slump or if opinions change on this company in the near term.

What do you think; is DDD a buy or a sell?

Let us know in the comments below!

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