Loose lips sink ships. Or at least they try to…
Take the case of 3D Systems Inc. (NYSE:DDD). Investors who bailed on the stock recently – and there were a lot of them – missed a great rally on Tuesday. That 8.5% gain on heavy volume put the stock among the top 20 gainers of its exchange.
It would be easy to chalk that gain up to the market's overall rally that day.
No doubt, investors were thrilled to see evidence that Washington just may solve its budget impasse before we go over the "fiscal cliff." But that's not what's really going on here…
As I see it, DDD's rebound earlier this week was sweet justice indeed.
Or perhaps even revenge.
See, the stock had recently come under huge selling pressure after the financial advisory website Seeking Alpha slammed the company last week. An article on Seeking Alpha questioned the firm's huge recent sales growth, accusing management of "hiding something."
I've analyzed publicly traded firms for more than 30 years and I can tell you – that is a very serious charge.
In response, 3D Systems made the unusual move of holding a conference call to dispute Seeking Alpha's critique. Senior managers gave analysts an on-the-record look at the firm's accounting practices.
This call ranks as a key event in the recent history of 3D Systems' stock, which is up more than 185% so far this year. (Like I keep saying, you really can make a lot of money in this field.)
That's why I'm telling you, you have to be very careful who you listen to about tech stocks. So, let me take a moment to tell you what's really going on with DDD.
Here are three reasons I think DDD has the potential to blow that 185% gain out of the water.
The 3D Systems (NYSE: DDD) Advantage
First, 3D printing truly is a breakthrough technology – one of those "radical changes" that can make people rich. Back on Oct. 5, I told you I believe this is "the 21st century equivalent of the laser printer and the dawn of desktop publishing in the 1980s that changed the entire print industry."
3D printers are devices that can take a blueprint for pretty much anything and turn it into a real object in minutes. The "printer" has a nozzle that spits out special polymers. All you have to do is add a binding agent, and you can create everything from replica car parts to human jaws to a custom musical instrument.
Second, a wide range of companies throughout the U.S. are using printers from 3D Systems to make rapid and low-cost prototypes, as well as finished goods.
We're talking about such big names as Stanley Black & Decker Inc. (NYSE:SWK), Ford Motor Co. (NYSE:F) and Texas Instruments (NasdaqGS:TXN). Even a branch of the Pentagon relies on 3D Systems' printers.
So, from a sheer technical standpoint, this company is a winner. And that brings me to my final point.
Third, a couple of years back, senior managers realized this area of high tech was about to go mainstream. They understood this is a part of a broad and huge global trend known as the "maker movement."
The term refers to people who like to use cutting-edge systems to make things themselves. It includes tech hobbyists who build their own computers or robots, musicians making their own recordings, and authors self-publishing their books and selling them on the Web.
3D Systems didn't gloss over the profit potential of this do-it-yourself trend. And you shouldn't, either.
Consider that Maker Faire New York 2012, a marquis DIY event held two months ago, drew more than 100,000 visitors. Many were there to learn more about 3D printing.
Now, you know why 3D Systems worked so hard to come out with a low-cost product tailored for the entry-level buyer. It's called the Cube, and it retails for just $1,299, not counting supplies. The idea is to hook them early and build a customer base that lasts a lifetime.
I think this is great marketing that will really burnish the brand.
See, a lot of small companies can only afford the base model. But as their ideas convert to sales, they will no doubt trade up to better machines. And 3D Systems will be there with both professional and production models, not to mention 3D software or custom parts if they need it.
The hardcore investors among you will be wondering how 3D Systems compares to its chief competitor, Stratasys Inc. (NasdaqGS:SSYS). Stratasys is a savvy company, but it's only going after higher-end buyers. They make bigger and more expensive machines that appeal to major corporate buyers.
From a technical standpoint, I suppose you could debate the merits of either company. But from the basis of stock gains, there really is no question who the winner is. DDD is up about 185% so far this year compared to a 119% gain for SSYS.
With so much going on in the world economy, I can't predict that DDD's rally will continue without setbacks. But it's clearly a leader in the entire tech sector. And with such strong trends in its favor, 3D Systems faces a very bright future, indeed.
P.S. I hope you'll join me for my 2013 Technology Summit, set for Wednesday November 28th . We'll be exploring the five advanced military technologies that will change the world. This is just the kind of thing you folks are always asking for. You can still reserve your place. Just click here. It's free.
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About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.