3D Systems: For Experienced Speculators And Momentum Players Only

Until you're familiar with both sides of the story on a stock, you will never know it well enough to know when to hold it through volatility and when to fold.

The bulls' thesis is that 3D Systems Corporation (DDD) is one of the leaders in the fast growing 3D printing market. The 3D market is set to grow tenfold over the next ten years; 3D Systems being a leader is likely to capture more than a fair share of this growth. It's already showing its credentials delivering 69% EPS growth last year and likely 100% next year and throwing off lots of free cash. They also point out that the stock has significant momentum and accumulation behind it.

The bears claim that if 3D Systems increases EPS to $14 in ten years (from the current $0.68) it still won't be a good investment. At a PE of 15, $14 equates to a $210 price. This is just a 13% annual return to the investor based on the current price. They also feel that $14 EPS would be a stretch given the rate at which they are issuing new shares to buy growth. They also point to the hidden risks that come from the opacity of its acquisition-led growth strategy, which makes it easy for management to obfuscate its true financial picture. They demand a lower price, given the dangers.


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