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Once I get my son Joey off to school each morning – meaning I can switch away from SpongeBob Squarepants or Scooby Doo – I'll put on CNBC as I get ready for my commute to the office.
You know the drill… I leave it on in the background and sort of half listen as I finish dressing. Invariably, a story or two will pique my interest,
causing me to give it my full attention.
And yesterday, that story was 3D printing.
We Saw This One Coming
The North Huntingdon, Pa.-based 3D printer ExOne Inc. (Nasdaq: XONE) warned that full-year 2013 revenue would be in a range of $40 million
to $42 million – down from earlier expectations of $48 million.
"Now that's interesting,"
I thought to myself.
You see, when we recommended the 3D printing sector to you back in July – describing it as one of those rare shots at a "ground-floor investment
opportunity" – the one stock that Radical Technology Profits Editor Michael A. Robinson said to steer clear of was… ExOne.
During my July interview, Michael enthusiastically recommended 3D Systems Corp. (NYSE: DDD) and Organovo Holdings Inc.
(NYSEMKT: ONVO). But he urged readers to take a
wait-and-see approach with ExOne, saying the stock had just corrected.
The result: Organovo has gained as much as 117%, and is still up 86%; 3D Systems has risen as much as 93%, and is still up 77.6%.
But ExOne really hasn't done anything.
And then on Jan. 14, after the closing bell, the company issued its warning.
Investors punished the stock, sending the shares down 8% in by late afternoon. The shares are now down nearly 14%.
Michael was here for meetings while this was unfolding, so I had the chance to ask him firsthand for his thoughts on the sector.
"I still like this sector a lot for the long haul," he told me recently. "Obviously this downward guidance is going to weigh on the sector, and increase
the risks in the near term. Investors who are looking to initiate new positions might want to break that first 'buy' up into several increments – say, a
third, a third and a third."
In other words, if you missed this run the first time, but don't want to miss the long-term growth, figure out what your ideal position would be, and then
break into three equal increments.
Buy the first third now, and then look to add to that position on pullbacks – or do so over a predetermined time frame (for instance, by purchasing the
final two-thirds of that position in two equal installments – say, three months from now and six months from now).
And 3D Systems is probably your best bet.
"I like this approach, because of the volatility of the stock," Michael said. "So we're going to watch this and come back. The company is fundamentally
strong. It's reinvesting its earnings in the business, which I like. And the long-term growth potential is huge… even massive."
A $10 Billion Winning Bet
Goldman Sachs Group Inc.
(NYSE: GS) recently said that 3D printing is already a $2.2 billion market and will reach $10.8 billion by 2021.
About the Author
Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning. With his latest project, Private Briefing, Bill takes you "behind the scenes" of his established investment news website for a closer look at the action. Members get all the expert analysis and exclusive scoops he can't publish... and some of the most valuable picks that turn up in Bill's closed-door sessions with editors and experts.