Why the Metals 3-D Printing Space Is the Place to Be in 2014

If they were making a 2014 version of The Graduate, the iconic one-word line uttered to Dustin Hoffman's character as advice in where to make his fortune might be "metals." That's because demand for 3-D printers that can print in metals is in the relatively early stages, and it seems that we're on the cusp of an incredible growth trajectory.

The most direct way for Hoffman's character -- or you -- to invest in this growth story would be to buy shares in one of the publicly traded pure-play 3-D printer makers that offer systems that can print in metals: 3D Systems Corporation (DDD -1.15%), Arcam AB  (NASDAQOTH: AMAVF), and ExOne (XONE). Neither Stratasys nor voxeljet offer systems that can print in metals, but it's just a matter of time before Stratasys enters the metals space, in my opinion.

Industry juggernaut 3-D Systems Corp. just acquired metals capabilities last summer when it brought Phenix Systems, while Arcam has long been solely involved in metals, and ExOne has offered systems that can print in metals for some time.

From the demand side, General Electric Company (GE 1.30%) is an important player, as it's the world's largest user of 3-D printing technologies in metals.

Major metals 3-D printing technologies and the players
There are various metals 3-D printing technologies, though investors might want to home in on just three types: laser sintering, electron beam melting, and binder jetting, as these are the technologies employed by 3D Systems Corp., Arcam, and ExOne, respectively. Laser sintering is the most common metals printing technology. 

This table is not all-inclusive; however, it should be a good summary of the major technologies and manufacturers.

Laser sintering and electron beam melting are both forms of powder bed fusion technology. In this tech, heat -- from a laser or an electron beam -- is used to melt and fuse the powder material. In binder jetting, a liquid bonding agent is deposited to join the powder material.

Laser sintering and EBM are more similar to one another, given they're both forms of the same core technology. Laser sintering is generally viewed as the best choice for producing components that have complex geometries and internal features or passages, while EBM is considered a good choice for bulky complex solid geometries or extremely delicate shapes. EBM is generally a faster tech, so it has advantages when larger production runs are needed. That said, the companies in the metals 3-D printing space are all focusing on increasing their systems' speeds, as speed is one critical hurdle that must be jumped before 3-D printing will make notable inroads into mass manufacturing.

Arcam, for instance, is involved in a project called FastEBM, whose goal is to zip up how fast its EBM systems can churn out components.

As to metals capabilities, 3D Systems' Phenix systems can print in a wide range of metals, including titanium. Arcam's systems can print in titanium, several titanium alloys, and a cobalt-chrome alloy (used in orthopedic implants), while ExOne's machines have bronze, 316 stainless steel/bronze, and 420 stainless steel/bronze capabilities. Arcam's a pure-play on metals 3-D printing, while 3D Systems has the industry's widest range of materials capabilities, and ExOne's systems can also print in sand (which customers use to produce molds, used for casting metal components) and glass.

Titanium deserves special mention, as it's a key aerospace industry metal that's used to produce airframes and engine parts, and also heavily used in the medical implant industry. Its uses stem from its very high strength-to-weight ratio, and good corrosion and fracture-related properties. 

Big opportunities for the metals 3-D printing players
Here's some supporting evidence that demand is significantly increasing for 3-D printers that can print in metals:

3D Systems Corp. is forecasting huge growth in its metals business 
In its recently released fourth-quarter and full-year 2013 earnings report, 3D Systems noted that its 2013 direct metal revenue was $14.3 million. While this represents just a small portion of its total revenue, 3D Systems is forecasting a fast ramp-up in revenue from this business. As CEO Avi Reichental said on the earnings call: "Metals is in the beginning stages of what we believe is a very exciting journey. As we have said repeatedly now, we have been sold out of capacity every quarter since we acquired this business [Phenix] and we expect that this year it could generate some place between $25 million and $50 million in revenue and it's just the beginning."

General Electric Company's 3-D printing capacity ramp-up
General Electric Co. is already the world's largest user of 3-D printing technologies in metals, and it plans to invest "tens of millions" in this technology in the next five years. So, GE's actions should significantly shape the 3-D printing space going forward.

GE needs considerably more capacity beyond what it already has at its full-scale 3-D printing operation, which it acquired when it bought Morris Technologies in 2012, to produce fuel nozzles for its new Leap jet-engine. General Electric reportedly began testing 3-D printers from both 3D Systems and Concept Laser last year to determine if either or both of these companies' printers will be part of its capacity ramp-up.

Wall Street firm Jefferies sees big orders for metals 3-D printers on the horizon
Last week, Jefferies upped Arcam's rating to buy from hold, citing that it believed Arcam had a shot at receiving some large orders for metals 3-D printers. Jefferies noted that its checks indicated that "6-12 large industrial groups are in deep discussion with metal 3D printing companies on larger orders that will be integrated into existing production lines." The firm believes "GE, Stryker, JNJ, EADS, Airbus, BMW, Medtronic, and others are likely to place large orders in 2014."

Foolish final thoughts
The metals 3-D printing space is likely to be an attractive one for investors. Demand for 3-D printers that have metals capabilities will likely grow at a faster rate than the overall 3-D printing sector, as 3-D printing makes increasing inroads into manufacturing applications.