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One 3D Printing Stock You Might Be Overlooking

By Travis Hoium - Apr 29, 2017 at 10:00AM

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There's one company making a profit on 3D printing, and it's set up for growth no matter what 3D technology emerges.

3D printing is becoming more and more common in product development for businesses large and small. Investors have given the most attention to 3D-printer companies like 3D Systems (DDD 4.50%) and Stratasys (SSYS 4.81%), and for good reason. They make the 3D printers and the materials that they run on, but they're not the only game in town.

Proto Labs (PRLB 2.94%) is a company that 3D-prints and rapid-prototypes products in small quantities for production and product development. And as a profitable company in the space, it's a stock investors shouldn't overlook.

3D-printed Easter egg

Image source: Getty Images.

What makes Proto Labs different

While 3D Systems and Stratasys are trying to develop 3D printing technology, Proto Labs is deploying it for real-world applications. The company uses 3D-printing technologies like stereolithography, laser sintering, and PolyJet -- typical 3D-printing processes -- as well as CNC machining and low-volume injection molding.

For product developers or manufacturers, it's a one-stop shop for creating products. Rather than having a 3D printer with limited capabilities in your office or the lab, you can outsource the work to Proto Labs and use a variety of techniques to get the product characteristics needed.

Proto Labs relies on other companies to develop the technology to make rapid-prototype products, which has allowed it to expand lately from plastics into more metals applications. Its real technology is in its part-management and quoting system. A designer can easily upload a part to Proto Labs' website, get a quote, and place an order in a matter of minutes -- and in as little as one day, the part can be on that designer's desk. Proto Labs brings real value to customers when speed is of the essence.

Where Proto Labs differentiates itself

The advantage Proto Labs has financially over 3D Systems and Stratasys is that it doesn't have to worry constantly about increasing its installed base to improve materials sales. Instead, it can increase capacity as needed, and can adopt new technologies as they're ready to be deployed. The financial advantage of that model can be seen below:

PRLB Revenue (TTM) Chart

PRLB Revenue (TTM) data by YCharts.

Proto Labs isn't as big as the 3D printer companies, but it's far more profitable and stable for investors.

The long-term winner in 3D printing

Buying 3D printing stocks doesn't have to be about owning the 3D printer manufacturers themselves. Proto Labs has built a business model that leverages the technology others develop, and uses it to create value for its customers. And it's a long-lasting business model that's highly profitable for investors.

Product development isn't slowing, and as more products become customized for consumers, there will be an even greater need for the kind of services Proto Labs provides. That's why this is a 3D printing stock you shouldn't overlook.

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Stocks Mentioned

Proto Labs, Inc. Stock Quote
Proto Labs, Inc.
$47.22 (2.94%) $1.35
3D Systems Corporation Stock Quote
3D Systems Corporation
$10.69 (4.50%) $0.46
Stratasys Ltd. Stock Quote
Stratasys Ltd.
$19.19 (4.81%) $0.88

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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