Is there a cheap way to play 3D printing?

Chris Lau, Kapitall: 3D printing is as new and expensive as a CD player in 1982. Is that about to change?

Cheap stocks and 3D printing are two phrases not usually uttered in the same breath. 3D Printing stocks trade at stratospheric price-earnings (P/E) multiples. When Hewlett-Packard ( HPQ) enters the market, this could change the 3D printing landscape.

HP could announce 3D printing

At its annual meeting, HP said it would soon make big changes in the current technology environment. Shares recently broke the $30 level, but are trading as a PC play. HP derives much of its revenues from PC sales, and it is making strides in that space by selling Chromebooks and Android tablets.

When HP confirms its entry in 3D printing, it will offer investors a cheap play in the sector. All major 3D printing stocks trade at a price of profit (POP) at 64 and above. This includes Exone ( XONE), 3D Systems ( DDD), and Stratasys ( SSYS).

HP’s POP is just 8.

HP could hurt competition

To characterize HP as a competitive threat is an understatement. HP’s market capitalization dwarfs the other 3D printer companies by tenfold. As it improves its operations, HP will also boost its cash flow. This will give HP the R&D budget and marketing budget to produce a 3D Printing solution across the consumer and enterprise space. HP would feasibly break the price barrier for low-cost 3D Printers.

HP could still stumble. If it introduces low-cost printers, but charges for expensive 3D ink cartridges, its competitive threat could be muted.

Conclusion

Downside in 3D printing stocks could continue for the next few months as uncertainty weighs. HP’s entry in the market, along with risk aversion for stocks in general may hurt 3D printing stocks.

Click on the interactive chart to view data over time. 

1. Hewlett-Packard Company ( HPQ): Hewlett-Packard Company offers various products, technologies, software, solutions, and services to individual consumers and small- and medium-sized businesses (SMBs), as well as to the government, health, and education sectors worldwide. Market cap at $57.06B, most recent closing price at $29.92.

 

 

2. 3D Systems Corp. ( DDD): Engages in the design, development, manufacture, marketing, and servicing of 3D printers and related products, print materials, and services. Market cap at $7.83B, most recent closing price at $76.39.

 

 

3. Stratasys Inc. ( SSYS): Engages in the development, manufacture, and marketing of three dimensional (3D) printing, rapid prototyping (RP), and direct digital manufacturing (DDM) systems primarily in North America, Europe, and the Asia Pacific. Market cap at $5.26B, most recent closing price at $125.31.

(Written by Chris Lau, all data sourced from Zacks Investment Research.)

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