This article was updated on April 7, 2015. 

You've probably heard of 3D printing because this hot topic has made its way from the techie and financial news to the more mainstream press. You might know that two U.S. companies, 3D Systems (NYSE:DDD)and Stratasys(NYSE:DDD)are the two biggest players in this industry; perhaps you've even heard of ExOne(NYSE:DDD)Arcam, and voxeljet(NYSE:DDD)

If that's about where your knowledge of 3D printing as a possible investment ends, this article is for you.

3D printing in a nutshell
Briefly, 3D printing is an additive-manufacturing technology. It builds up a three-dimensional component layer by layer under the control of a computer. By contrast, traditional manufacturing is subtractive by nature, as it involves whittling away at a chunk of material to fabricate the desired component.

The first 3D printing technologies were stereolithography, in which layers of photopolymers are cured by UV light lasers, and fused deposition modeling, in which heated thermoplastic is extruded from a nozzle. However, there are many different 3D printing processes today. 

What are some key reasons why investors might consider investing in 3D printing stocks?
In one word: growth. This is a disruptive technology, with the industry expected to balloon from $3.1 billion in 2103 to more than $21 billion in 2020 -- about a 31% average annual growth rate.

Many top industrial bigwigs -- such as General Electric and Boeing -- are either currently using or planning to soon start using 3D printing for actual production of critical components, rather than for just production of non-critical components and prototyping. This should drive demand for higher-end 3D printers, as well as 3D printing materials.  

There are two key reasons for 3D printings' turbocharged current and projected future growth rates: cost savings derived from greater efficiency and increased innovative possibilities. The cost savings are primarily driven from using less material. These savings can be considerable when we're talking about pricey exotic metals, such as titanium, which is widely used in the aerospace industry. A boon in innovation is occurring -- and should continue to occur -- because 3D printing allows for the design and production of some products that can't be made using traditional manufacturing processes.

Naturally, the projected high-growth rates make this an attractive space, which means competition will further heat up. Deep-pocketed Hewlett-Packard, for instance, has already announced its plans to offer an enterprise-focused 3D printer based on its new Multi Jet Fusion technology in 2016. 

What are some key reasons why investors might not want to invest in 3D printing stocks?
In one word: risk. This risk stems mainly from these stocks' high valuations as well as the onslaught of competition this fast-growing space is attracting.

If losing 10% or more of your investment in one day or the possibility of losing a fair chunk of your entire investment's value in a short time would cause you stress, you should not invest in this space. These former high-flying stocks began big nosedives in early 2014 and are still struggling.

How many pure-play 3D printing stocks are there?
There were five pure-play 3D printing stocks trading on U.S. stock exchanges at the end of 2013: 3D Systems, Stratasys, ExOne, Arcam, and voxeljet. (I'm excluding more speculative tiny companies, as well as Organovo Holdings, which "bioprints" human cells to produce tissues, because it's a biotech play.) A new pure play joined the ranks of the publicly traded in mid-2014: Materialise (NASDAQ:MTLS)

All but Arcam are listed on major exchanges. Arcam trades on the Nasdaq OMX Stockholm, though it can also be bought over the counter in the U.S. It's thinly traded, which means that it can be extra volatile.

Are there any key things I should know about these pure plays?
There are a few, but we'll keep it to the biggies. First, 3D Systems and Stratasys are the first movers in the group. In general, companies that are first movers -- meaning first to enter a new market, which often involves creating the market, too -- maintain a long-term competitive advantage. Of course, this is a generalization, and first movers can fall by the wayside, too, especially in tech-heavy niches. 

Second, these companies target different markets. 3D Systems, which sports the broadest product lineup since it has seven distinct technologies, targets the consumer, commercial, and industrial markets. Stratasys also focuses on these three markets, but has a strong educational bent as well. Voxeljet makes printers for commercial and industrial users, while ExOne and Arcam focus solely on industrial entities.

Do the pure plays have major operations other than making 3D printers?
First off, only five of the six pure plays produce 3D printers, as Materialise does not. Materialise makes 3D printing software and provides on-demand 3D printing services.  

All these companies except Arcam have general on-demand service operations where customers' components are 3D printed to their specifications. In 2014, however, Arcam acquired DiSanto Technologies, a contract manufacturer of medical implants. It also bought a supplier of metal powder in 2014. 

Are there other ways to invest in the 3D printing industry?
Yes, there are several, but we'll stick to the more direct ones. You could invest in companies that make 3D printing software. Other than Materialise, there are two big players on this front: France-based Dassault Systemes and U.S.-based Autodesk. But it's important to note that neither are pure plays, as both make software for other applications, too. 

Another non-pure play you might want to explore is quick-turn, on-demand manufacturer Proto Labs (NYSE:PRLB). This fast-growing company traditionally used just conventional manufacturing -- CNC machining and injection molding -- but expanded into 3D printing when it bought Fineline Prototyping in April 2014.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.