3D printing stocks were all the rage a few years ago, but few have stood the test of time.
ProtoLabs (NYSE:PRLB) has been the standout, continuing to perform even as other stocks have seen their momentum ebb. During this appearance on Motley Fool Live, recorded on Feb. 11, Motley Fool Co-Chairman and Chief Rule Breaker David Gardner and Industry Focus host Nick Sciple discuss what makes ProtoLabs a winner, and whether or not Gardner continues to be bullish on ProtoLabs today.
Nick Sciple: Yes, I mentioned this theme is innovators and mature industries and other company that fits that bill is ProtoLabs, that's PRLB, is the ticker. It fits into this discussion we're having about fads because I think well-documented in 2014, the hype cycle in the 3D printing additive manufacturing space peaked. Why does ProtoLabs stand out for you among that space? Because ProtoLabs is, I think in the past maybe some other three printing companies have been recommended, ProtoLabs is the lone remaining standing company.
David Gardner: Well, it's really the one that succeeded most. I think it's fair to say that I tend over the course of time when I do sell, which is very rarely and very infrequently, I'd typically will sell off my losers, and I'll conclude that they are losers well after most of the rest of the world. In my strength is my weakness, as I said earlier, I think a big part of Rule Breaker investing, Nick and all my fellow Fools, is that you keep holding and holding and holding. We just told the story of Darling Ingredients and you now have a triple, but you had to wait eight years before you got that. I'm instructed by that, but I do think that ultimately, if I decide company is not going to win, then I will finally sell. Again, everybody else has already sold by that point. But that's OK, because you're going to be rewarded far more often holding winners than failing to sell losers. If you play the math out, and I have in real time in front of Motley Fool members for 27 years now, you're going to see the math works wildly to your favor to overhold everything. I overhold my losers. But in this case, if I start deciding the industry or the world has changed, Nick, and I get this consulate about one or another company, I will sell them. We've done that certainly before in Rule Breakers and Stock Advisor. ProtoLabs has ended up being the company that kept thriving. In a world where lots of people are competing to make a 3D printer, these guys were using 3D printers in order to make rapid overnight prototypes of things and send you a 3D version of it through the mail so that as a marketing person at your corporate meeting the next morning show what the packaging is that you've intended for this product. You could have a 3D printed prototyped rapid delivery overnight business, like FedEx-ing your idea in tangible form to show off. That's been in a world of innovation, last 10 years, have seen more innovation than probably the last 100 years combined. You can see how this company has thrived, and indeed it has. So that's why ProtoLabs was a Rule Breaker and continues to be a Rule Breaker and it's been a winning stock too.
Sciple: It's been able to stand out from the crowd. If you just look at a chart, it's been able to massively outperform many of those other companies. In the space though, there has been a little bit of renewed excitement around 3D printing. I know Cathie Wood in her ARK Investment fund that has had some heavy investment in 3D printing. What's your excitement level on this subsector today going forward?
Gardner: Well, I like it very much, sure. It makes a lot additive manufacturing, which is another phrase that people use to describe 3D printing. Basically using a printer and not just a print, a laser-printed piece of paper with your words on it, which is what most of us thought of when we thought of Hewlett-Packard and our printers. But instead, printers are printing things. It might be literally the wing of an airplane. It can be printed in metal, it could be printed in plastic, can take lots of other forms. The human race is so inventive that we will continue to dream up new, more efficient ways to make stuff and to make new stuff. I really loved the idea that you can not just print your book report, but print almost anything in the future if it's efficient enough. Certainly, not everything can be printed. Zoom does not solve all human connection problems. I love that we have Zoom Motley Fool Live, I love that we have our podcast reaching out to people. There are also real benefits of face-to-face as well. I don't want to overstate the case for additive manufacturing, but I've always been a fan. We've had this investments in place for a long time, and sure I love it over the next 10 years.