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3D Printing Stocks: Taking Investing Lessons From Apple


Will some of the companies utilizing 3D printing successfully disrupt the market?

Apple (NASDAQ:AAPL) is by many counts one of the most successful brands of all time. After dark days during the '90s, Apple re-emerged to pioneer new products like smartphones. The name of its founder, Steve Jobs, will probably go down in history alongside the likes of Wright and Ford as paragons of American ingenuity. What's more, the company's technologies have always been disruptive. Whether by putting computers into the home or directly into your hand, Apple has always had a knack for creating new markets.

With that in mind, we decided to look to the story of Apple's ascendance for clues to the future of 3D printing stocks. Are any of the still-relatively-unknown companies in 3D printing on track to becoming a household name? After all, it took a rare combination of technical savvy and investing prowess to separate Apple from the pack, where it was often outpaced by bigger sales at companies like Commodore and Tandy.

Let's look at four axioms involved in Apple's success.

Educate the public about your new product. Steve Jobs was not really a hardware guy, at least not at the outset. As the story goes, it was his early partner, Steve Wozniak, who was the brains behind the Apple 1, the circuit-board basis for the first home computer. Jobs also wasn't successful at selling his idea to bigger companies – including executives from IBM (NYSE:IBM) and Xerox (NYSE:XRX) -- which both scoffed at the usefulness of a personal computer. Apple's own employees were still using typewriters as late as 1980.

A "disruptive" product needs to be explained to the public, and Apple undertook an exhaustive campaign to make sure that it was doing just that. In an approach that combined instructive print advertisements, tongue-in-cheek wit, and carefully written instruction manuals, Apple successfully made a case to the public that normal people could use computers to heighten productivity and minimize busy work.

For several reasons, 3D Systems Corp (NYSE:DDD) may be ahead of the curve on this front. Its clever ticker and ubiquity on YouTube, thanks to a special spot on National Geographic, give it an edge in terms of visibility with the public, heightening anticipation for 3D printers in the home.

Don't fear partnerships with bigger companies. If you can't get a larger company to buy you outright, you can still explore other kinds partnerships, such as when Jobs offered executives at Xerox cheap stock in exchange for permission to view their new graphics technology. Jobs was convinced that Xerox's interface, which used graphically designed representations for folders and applications, was the future. And it was.

Stratasys (NASDAQ:SSYS) recently severed a partnership with Hewlett-Packard (NYSE:HPQ) after collaborating on a Design Jet 3D printer. Stratasys's stock has soared ever since, in no small part due to an upgrade from Credit Suisse, a sign that finance is paying more attention to the industry as a whole.

Making history is cool, but not as cool to investors as making history by making money. Apple had what could probably be referred to as the most successful IPO in American history. It raised more capital than any other offering besides Ford's (NYSE:F), and made more instant millionaires than any offering at all. Jobs was featured on the cover of all the major financial magazines that year, from Fortune to Time, further boosting Apple's notoriety. It didn't seem to matter that many of those profiles also contained negative assessments of some Apple products, including its word processing, which Fortune dubbed "slow" and "clumsy."

Don't try to compete in two markets at once. Apple never succeeded in its bids to siphon off market share from business supply giants like IBM, which typically kept pace with Apple's innovation despite being slower to recognize the potential of PCs. Microsoft's (NASDAQ:MSFT) Office Suite is still the industry standard, and Apple was forced to shift its focus toward consumer electronics like iPods and tablets in order to remain relevant during the late 2000s. 3D printing stocks are relevant to a number of different markets (arguably most of them), but firms will have to remain focused if they hope to compete with the more established names like Autodesk (NASDAQ:ADSK) that have much more to spend on R&D and advertising.

Will some of these companies utilizing 3D printing successfully disrupt the market?

Click on the interactive chart below to see data over time.

Which 3D printers have the smartest strategy? Here's a list to consider.

1. Stratasys Inc.: Engages in the development, manufacture, and marketing of 3D printing, rapid prototyping, and direct digital manufacturing systems primarily in North America, Europe, and the Asia Pacific. Market cap at $3.62 billion; most recent closing price at $93.45.

2. 3D Systems Corp.: Engages in the design, development, manufacture, marketing, and servicing of 3D printers and related products, print materials, and services. Market cap at $4.82 billion; most recent closing price at $50.06.

3. Autodesk, Inc.: Provides design software and service solutions to customers in architecture, engineering, and construction; manufacturing; and digital media and entertainment industries. Market cap at $8.72 billion; most recent closing price at $39.07.

4. The ExOne Company (NASDAQ:XONE): Engages in the development, manufacture, and sale of three dimensional printing machines and printing products in the Americas, Europe, and Asia. Market cap at $674.73 million; most recent closing price at $50.80.

5. Hewlett-Packard Company: Offers various products, technologies, software, solutions, and services to individual consumers and small- and medium-sized businesses, as well as to the government, health, and education sectors worldwide. Market cap at $41.94 billion; most recent closing price at $21.74.

List compiled by James Dennin. Analyst ratings sourced from Zacks Investment Research. All other data sourced from Finviz.

Editor's note: This story by James Dennin originally appeared on Kapitall.

Kapitall's lists break complex concepts down to their basics, offering education and investing ideas to novices that double as a refresher course for more seasoned investors. Inspired by video game design, Kapitall's revolutionary brokerage platform combines a graphical user interface with tools that make it easy to build portfolios, share ideas and execute trades.

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