We live in an increasingly tech-centric world, but small business and actually making physical things are still important parts of our economy. The Maker Movement, enabled and empowered by things like 3D printing and Internet-based technologies, is one reminder that innovation and entrepreneurship is alive and well, and sometimes the biggest things start in small batches.

Along those lines, rapid prototyping firm Proto Labs (NYSE:PRLB) blends manufacturing and technology to provide the building blocks for all kinds of products -- and I think it's an exciting new stock for the real-money Prosocial Portfolio I manage for Fool.com.

Quick-serve business
Proto Labs Chairman Larry Lukis founded predecessor company The ProtoMold Co. in 1999. Maple Plain, Minn.-based Proto Labs provides lightning-fast turnaround of small-run parts and prototypes for product developers.

When product developers need only a small number of some widget, cog, or product prototype, they turn to Proto Labs and its products like Firstcut, which makes CNC machined parts, and Protomold, which uses the injection molding technique.. Its motto is "Real Parts, Really Fast" -- and that's its advantage.

Low-volume manufacturing is a historically underserved niche market; bigger rivals haven't been interested in that area. Proto Labs has jumped in with its proprietary technology to take advantage of the need, which wipes out time-consuming inefficiencies in areas like quotation and order placement, equipment, and labor in producing customized parts while being price competitive. According to the company, in many cases it can provide quotes in minutes and ship parts in as little as one day.

Proto Labs conducts all of its business with its customers over the Internet. Its target customers are the millions of developers who use 3D CAD software to design products over a myriad of different end-use markets.

Apparently Proto Labs' customers are happy, too, with repeat business making up 86% of Proto Labs' revenue in 2013. That bodes very well for the future as it brings more clients on board.

Proto Labs' business plays in the 3D printing area, even though it's not always an apples-to-apples comparison. For example, CNC machining is a "subtractive" process -- it takes a piece of material and whittles it down. 3D printing is "additive," meaning it uses an extruder to build out.

Speaking of which, last spring Proto Labs bought additive manufacturing service Fineline. While it's still a tiny part of Proto Labs' business, it's a great opportunity for growth.

Some cool parts of Proto Labs
I like to look for stakeholder-friendly attributes for Prosocial Portfolio stocks, and Proto Labs' role in making the lower volume part of the manufacturing marketplace more efficient strikes me as exciting and a positive for overall innovation.

Although some of Proto Labs' customers are huge companies like Xerox, the company also serves clients who aren't your typical big companies; they're the small businesses and entrepreneurs of the world. Proto Labs' website includes customer testimonials from all kinds of clients that make everything from fuel cells to medical equipment. The case studies about Proto Labs' product uses included an artist who had been commissioned to do a sculpture for a Ronald McDonald House and a retired Navy officer who used Proto Labs to make a prototype of his idea for a must-have product for swamp travels, The Piranha Paddle.

On a more up-close-and-personal level, Proto Labs has provided something our economy has desperately needed over the years: jobs. In January 2009, Proto Labs had 277 employees, and it has about 1,000 full timers now. A key point here: As our economy recovered from a financial crisis and a deep, dark recession, this company has been hiring instead of firing.

Last summer, Minneapolis-based Star Tribune ranked Proto Labs as No. 15 on its Top Workplaces countdown for 2014. It also marked the first year that it competed with the big boys, as it was classified along with large companies with more than 500 employees and is one of the youngest companies in that category. Here's some coverage of their cultural strategy by fellow Fool Steve Heller.

Proto Labs embraces and encourages innovation. Since 2011, the company has run an annual Cool Idea! Award program that invites contestants to submit product ideas. Winners can win an aggregate of up to $250,000 in grants to help bring innovative ideas to fruition.

Just last week, Proto Labs presented its latest Cool Idea! Award to Skyven, whose vision is to harness multiple sun-powered technologies in a single solar panel system that would provide green electricity and hot water.

A solid deal
Proto Labs' shares have fallen about 15% in the past year, making an appealing buy opportunity today. It's got a lot going for it, having boasted impressive sales growth and solid profitability. Over three years' time, Proto Labs has generated a 29% compound annual growth rate in revenue and a 31% increase in CAGR in net income, according to S&P Capital IQ data.

In the 12 months ended Sept. 30, 2014, Proto Labs' revenue increased by 30% to $198 million, increasing net income by 20% to $40.9 million, or $1.56 per share.

CEO Vicki Holt, who came on board about a year ago, has big aspirations for the company, setting her sights for $1 billion in sales. There are good signs in forward momentum, as it looks like more product developers are entering the fold. Last quarter, the company reported a 19% increase in developers served and a 3% increase in spending per developer. Building out the Fineline service should also help over the long haul. Last quarter, its revenue increased 38% to $3.4 million.

I like to see a clean balance sheet, and Proto Labs has that, too. It has $58.5 million in cash and negligible debt.

Proto Labs trades at 31 times forward earnings, not exactly surprising for a tech company. Although it's difficult to find apples-to-apples rivals, we could compare that multiple to 3D printing companies Stratasys (NASDAQ:SSYS) and 3D Systems (NYSE:DDD), which trade at 27 and 28 times forward earnings, respectively. So, it's trading at a similar multiple as those better-known companies in a similar area.

Still, I think with a PEG ratio is 1.39, Proto Labs looks attractive, given growth opportunity in a large market.

Some shifting sands
Proto Labs does have competitors to worry about, just like any company, and they range from small shops to large operations, and some companies bring prototyping capabilities in-house. Meanwhile, when we think about Proto Labs in the 3D printing context, it also reminds us that companies like Stratasys, the name behind MakerBot, and 3D Systems are in fact competitors. Going forward, they could even help more and more potential clients bring solutions in-house, and that's a competitive challenge for Proto Labs.

There has also been some upheaval and musical chairs at the top. CEO Holt has been in place for just a year. Chief Financial Officer John Way started on Dec. 1, replacing John Judd, who resigned in the summer, and a few weeks ago some other top personnel were reshuffled and retitled to share responsibility for the principal operating officer role..

Big changes in the top echelon of businesses' managements can be disruptive, to say the least, and Proto Labs' top brass appears to be undergoing a lot of change. Hopefully these changes will prove to be sound strategically, but it's still worth noting as a possible element of risk.

Foolish bottom line
Investing in smaller companies can be risky, period. However, small-cap stocks can be among the most rewarding, too. Some are young, aggressive, and have tons of growth ahead. Proto Labs is still a relatively small company but it has big plans, and I'm excited to take a small stake for the Prosocial Portfolio.

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.