Earlier this week, I introduced Fools to five different companies I was considering adding to my Roth IRA. Today, I'll be revealing that pick, as well as explaining why the other four companies didn't quite make the cut. At the end, I'll offer up access to a special premium report on one of the companies.
Trying not to dip back in too soon
I have nothing wrong with following Peter Lynch's adage that sometimes, the best stock to buy is the one that you already know. Sometimes, though, I like to space out the timing of my buys to make sure I'm not overcommitting to one stock. A little bit of time also helps add some perspective when evaluating a stock's potential.
So although I think Baidu (NASDAQ:BIDU) appears to be a really great deal right now, I'm going to have to pass this month. In the 18 months that I've been calling out my monthly buys, I've chosen Baidu three of those times, and it makes up over 15% of that portfolio. Even though I think worries about Baidu's competition with Qihoo 360 and slowing growth are overblown, adding more at this point simply wouldn't be prudent.
I'm more or less using the same excuse for passing on Whole Foods (NASDAQ: WFM) and IPG Photonics (NASDAQ:IPGP).
With Whole Foods, I think last month's sell-off was a little overblown, as the fundamental story remains firmly intact. With same-store sales still growing at impressive -- if slightly lower -- rates and only one-third of the total number of stores built out, I think there's a lot more to the Whole Foods story. However, I bought shares of the company for my Roth IRA just last month, and think waiting it out right now is a good idea.
IPG, on the other hand, is far and away the best in business when it comes to the disruptive innovation of fiber-optic lasers. My reasons for avoiding the company for this month are twofold. First, as with all the others, I've already bought a position in IPG for my Roth. And second, I'm no rocket scientist when it comes to lasers, and to be brutally honest, I might have a tough time spotting the next disruptive innovator that might displace fiber optics.
Which leaves us with two 3-D printing companies
So after winnowing down the candidates, I am left with 3D Systems (NYSE:DDD) and Stratasys (NASDAQ:SSYS), leaders of the 3-D printing duopoly. While I like both of these companies very much, when it comes to picking a favorite, I actually think it's pretty easy: My choice is Stratasys.
For starters, I like how Stratasys has historically shown more restraint when it comes to growth by acquisition. While the merger with Objet earlier this year was a big one, I think it was a really smart one. Outside of that, Stratasys' history of acquisitions and mergers is much shorter and focused than that of 3D Systems.
Stratasys is expected to come out with earnings next week. I'm aware that a stock trading at 73 times earnings could easily disappoint just by meeting expectations, as 3D Systems recently did. So it's important to make it known that while I'll be keeping track of my public returns as of today's publishing, I'm not allowed to buy shares until two days following this article -- meaning I could get a significantly cheaper, or more expensive, buying price.
Either way, I think the potential for 3-D printing is real, and that it's more than worth buying into in small portions right now.
Fool contributor Brian Stoffel owns shares of Baidu, Whole Foods Market, Stratasys, and IPG Photonics. The Motley Fool recommends 3D Systems, Baidu, IPG Photonics, Stratasys, and Whole Foods Market. The Motley Fool owns shares of 3D Systems, Baidu, IPG Photonics, Stratasys, and Whole Foods Market and has the following options: Short Jan 2014 $36 Calls on 3D Systems and Short Jan 2014 $20 Puts on 3D Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.