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Profit from Surging 3D Printing Stocks with This Niche ETF

The 3D printing industry represents one of the few untapped growth opportunities left for investors. After a slowdown over the past few years, the space is burning hot with 3D printing stocks surging lately on improving industry demand trends. In particular, Voxeljet VJET and 3D Systems DDD climbed 76% and 61%, respectively, while Stratasys SSYS, Materialise MTLS and ExOne XONE gained at least 45%.

Inside The Surge

Most of the rally was driven by the bullish report from Piper Jaffray’s analyst Troy Jensen, which states that 3D printing demand is accelerating given increased industry awareness and will result in higher profitability for 3D printing companies going forward. Stratasys will be at the forefront and lead the space higher, while other companies and a host of emerging startups will also benefit (read: Forget IBM, Buy These Thematic Tech ETFs Instead).

Even soft earnings from these leading players failed to steal the shine from the sector.

Earnings at a Glance

3D Systems missed our earnings estimate by a nickel reversing three back-to-back quarters of impressive beats. Revenues of $156.4 million came in line with the Zacks Consensus Estimate. The earnings miss pushed shares of DDD down as much as 10.8% on the day but recovered slightly to close at down 3.1% on May 4. However, the stock has rallied 40% over the past few days since its earnings release.

ExOne also came up with an earnings miss of 19 cents for Q1 and a narrow revenue beat of 9.79%. However, the stock shot up 15.3% at the close following earnings announcement and is up 33% since then. On the other hand, Voxeljet missed our earnings estimate by a couple of cents, sending its shares down 10.8% on May 12. However, the stock has gained nearly 12% since its earnings announcement.

Stratasys met our earnings estimate of two cents while beat our revenue estimate by 0.31%. The stock tumbled as much as 10.4% following the earnings release on May 16 but recovered to close up 2.4%.  

Solid Industry Outlook

Several researchers see rapid growth for the industry in the coming years. According to a new market research report, the 3D printing market is expected to reach to $30.19 billion by 2022, growing at a CAGR of 28.5% between 2016 and 2022. U.S. will be the major driver of growth with a large adoption of 3D printing technology by industrial manufacturing, aerospace & defense, and healthcare companies. In particular, innovation, enhanced printing performance and declining price will drive the global 3D printing market (read: 3D Printing ETF: A Good Long-Term Pick?).

Per the International Data Corporation (IDC), global revenues for the 3D printing market will explode to a massive $35.4 billion by 2020 from expected 2016 revenues of $15.9 billion.

ARK Investment Management expects 3D printing to be one of the highest growth potential industries in the economy and is set to transform the manufacturing landscape by collapsing the time between design and production, reducing costs, and providing greater design complexity, accuracy and customization.

ETF in Focus

Buoyed by the impressive performance in the space and bullish outlook, The 3D printing ETF PRNT soared 15.9% over the past one month compared with the gain of 7.2% for the broad sector fund XLK. This is a relatively new product offering pure play exposure to the global 3D printing industry. The fund has amassed $21.5 million in its asset base since its launch last July and trades in a light average daily volume of 10,000 shares a day. It charges 0.66% in fees and expenses (see: all the Technology ETFs here).

The ETF tracks the Total 3D-Printing Index, which measures the performance of equity securities and depositary receipts of exchange-listed companies from the U.S., non-U.S. developed markets and Taiwan that are engaged in 3D printingrelated business: 3D printing hardware, computer aided design and 3D printing simulation software, 3D printing centers, scanning and measurement, and 3D printing materials.

The product holds 42 securities in the basket with 3D Systems, ExOne and Stratasys occupying the top three positions. These firms collectively make up for 20.7% share. In terms of country exposure, U.S. firms take 71% of the portfolio, followed by France (15%), Germany (8%), Taiwan (2%), United Kingdom (2%), Japan (1%) and Sweden (1%).

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3D Systems Corporation (DDD): Free Stock Analysis Report
Materialise NV (MTLS): Free Stock Analysis Report
voxeljet AG (VJET): Free Stock Analysis Report
SPDR-TECH SELS (XLK): ETF Research Reports
3D-PRINTING ETF (PRNT): ETF Research Reports
Stratasys, Ltd. (SSYS): Free Stock Analysis Report
The ExOne Company (XONE): Free Stock Analysis Report
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