Every Monday we feature “A Stock to Sell” as our daily post. With every stock or investment we recommend as a sell, we give you a full explanation of why we advise against investing in it at this time. In today’s article we have two sells, both from an industry which has a great deal of promise for the future, but hurdles to overcome in the present.
3D Systems Corp. (symbol DDD on New York; www.3dsystems.com), makes and services 3-D printers and provides print materials.
The company’s sales rose 23.0% in the three months ended September 30, 2014, to $166.9 million from $135.7 million a year earlier, though its earnings per share fell 30.7%, to $0.18 from $0.26, on higher research and marketing spending.
3D Systems continues to grow through acquisitions, including Belgium-based LayerWise, a provider of direct-metal 3-D printing technology and a large-scale manufacturer of precision metal parts for the medical, dental and aerospace industries. The purchase price was not disclosed.
The company’s growth will depend on the outcome of its consumer push and how many more industrial firms come around to the benefits of 3-D printing.
The stock rose to a high of $97.28 in January 2014, as investors looked to invest in this new and promising technology. But the shares have retreated to today’s price of $27.95, along with most other 3-D printing stocks, as investors come to see them as overvalued.
3D Systems is well positioned in a growth industry, but even with its price decline, it trades at a very high 59.2 times this year’s forecast earnings of $0.52 a share.
We don’t recommend 3D Systems. If you own the shares, we think you should sell.
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Tech stocks: Weaker-than-expected outlook sends shares down for Stratasys
Stratasys (symbol SSYS on Nasdaq; www.stratasys.com) offers products ranging from entry-level 3-D printers to systems for rapidly developing prototypes of products. It also makes large-scale 3-D printing equipment.
The shares just took a big drop after the company released a weaker-than-expected 2015 outlook. As well, it needs to continue spending heavily on research and marketing to stay ahead of the competition and keep its sales growing.
Like 3D Systems, Stratasys is well positioned in a growth industry, but it trades at a high 28.5 times this year’s forecast earnings of $2.20 a share.
We don’t recommend Stratasys. If you own the shares, we think you should sell.
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