Amid the big names recently launching IPOs—such as Twitter, Hilton and Royal Mail—is a tiny German company operating in a far more disruptive industry. Shares of Friedberg-based Voxeljet, a company that sells 3-D printers, began trading on the New York Exchange on Oct. 19. If the gains of its peers are any indication, this is a stock to watch.
In just three years, the STOXX Global 3D Printing Pure Play index—made up of companies that derive at least 10% of revenues from the exploding three-dimensional printing sector—has climbed 535%. Year-to-date, two better-known companies, 3D Systems and Stratasys Ltd., are up 57% and 33%, respectively.
The industry is still in its infancy, bringing in US$2 billion this year, but observers think it will grow to US$30 billion. Jay Harris, an analyst with Axiom Capital Management, says these devices will revolutionize manufacturing. Aerospace, automotive, health care and other industries will be able to make parts with less labour, at a lower cost and in a shorter time. “This is very disruptive,” he says.
Investors have already missed out on some gains, but with companies enjoying 20% to 40% sales growth, there’s still upside to come, says John Baliotti, an analyst at Janney Capital Markets. As with all leading-edge technologies, returns will be bumpy in the short term, so buy companies with a diversified product lineup. “With all the things people are doing with them, it’s hard to imagine a day where no one’s using 3-D printers anymore,” he says.