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ChartWatch: 3D Stocks Continue to Rise

Jason Cimpl


Proto Labs (PRLB) could experience a 25% rise after reaching a new high.

The 3D printing industry has gotten its share of buzz from investors this year. Many believe 3D printing is a disruptive technology because consumers will be able to print items as opposed to buying them from a store.

Though there is some truth to that mentality - and there is certainly a ton of promise for 3D printing - I don’t expect 3D technology to be widely adopted for several years. Much like IBM’s (IBM) first computer, 3D printers are too expensive for most people right now. And commercial prominence is unlikely to occur until price levels decline.

However, that’s great news for Proto Labs … because they don’t sell 3D printers. The company owns 3D printers and charges customers to use them instead.

This is a great business, too. Many small original equipment manufacturers (OEMs) will use Proto Labs technology during the design phase of projects. This eliminates up-front printer costs for OEMs.

Proto Labs is also willing to take small orders, which most manufacturers are not willing to do. So engineers can fix design flaws using only a few prototypes as opposed to ordering a large batch.

Given this incredible niche, it’s no wonder that PRLB is near a new high. The shares look ready to motor higher too, given the breakout from a recent consolidation phase.

PRLB had been stuck between $44 and $50 for much of this year. However, the shares rocketed higher from this zone in April. The 50-day moving average (orange line) acted as a springboard that also helped pushed the stock above $54.

 This chart shows the price of PRLB shares along with an important support line to monitor.

The breakout above $50 suggests Proto Labs is in a new bullish phase. Though the 50-day moving average should continue to provide support, I’d be looking for $52 to become a near-term support zone (blue arrow).

Short-term traders can enter now, putting a stop just under $52. Investors who hold stocks for the long term may want to wait until PRLB pulls back to the 50-day moving average, although I cannot guess as to what price that could be.

I expect PRLB to rise to $60 this month, although my price target is $67 for 2013.

Equities mentioned in this article: PRLB IBM

Positions held in companies mentioned above:


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