“You really could retire on this one stock* — even if you’re already in your 60s!”

De-Teasing Nicholas Vardy's "Freeform Fabrication" pick

By Travis Johnson, Stock Gumshoe, December 11, 2012

You might notice that asterisk in the headline — Nicholas Vardy’s publisher, Roger Michalski, used the asterisk to note that he’s only releasing this “one stock” to the first 500 people to sign up … I’ll use the asterisk to tell you something else:

*not really

Sometimes people do “retire on one stock” — but I’m guessing it’s a very, very small percentage of the folks who try to retire on one stock. One great pick might make your retirement far more luxurious, but I’d say that you ought to be prepared to have your patience tried by a stable of weak nags while you try to develop that one brilliant stallion.

Sorry, my daughter’s into horses right now. (And no, she’s not getting one for Christmas. Thankfully, I have inside intelligence that Santa does not deal with live animals.)

Anyway, Vardy has occasionally teased and touted a few ideas that sounded interesting to us here at Gumshoe HQ, so we thought it would at least be worth a gander if he’s that confident in one pick … so what is it?

“The inside track on a world-changing innovation like this comes along once every century, if that…

“It’s what every investor dreams of…

“One great stock pick — and sayonara, baby!

“The problem is, it has historically taken decades for shares of a quality company to build into something you could retire on.

“Sure, if you’d bought early in life, Westinghouse, GE, AT&T, Ford, IBM, and many others could’ve made you rich by now…

“But who’s got a lifetime to wait nowadays?

“After 15 years of a totally flat market (when adjusted for inflation), tens of millions of Americans don’t have time to “buy and hold” anymore.

“They plan on retiring soon, and may not have anywhere near enough money to do it.

“But if you’re one of these folks, don’t panic just yet — because something very interesting has been happening in the market in recent years…

“A certain type of company has been banking ‘sayonara’ type gains exponentially faster!”

Hard to blame Vardy’s marketers for wanting to catch the attention of the most worried of investors — the baby boomers whose portfolios aren’t ready for retirement — they are, after all, the target market for pretty much every investment newsletter (and if we were organized enough to have a target market here at Stock Gumshoe, I’m sure it would be much the same). So we’ll take his stories on ever-faster millions made with past investments in Boeing, Microsoft or Apple at opportune times with a grain of salt, remember that big busts come with the territory when you’re making big bets, and try to figure out which pick he’s teasing.

He does, thankfully, toss out some clues for us … but first, I can’t resist sharing just a bit more of the hype with you:

“With just this one stock — in just five years — you could make up for a lifetime of missed Boeings, Microsofts, and Apples ….

“I’m talking about getting in early on sound public companies that are destined to be innovators in transformational technologies…

“… identifying these companies early is a lot easier said than done.

“But not for you, it isn’t. At least not today.

“In just a moment, I’m going to draw back the curtain on a small American company that has already cemented itself as a pioneer…

“In a revolutionary new industry that’s going to change the way almost everything is made — everywhere on Earth….

“… in my objective opinion, the company I’m talking about is one of those rare “sayonara” stocks investors may see only once in their lives.

“The kind that could realistically score you 60, 70 — even up to 100 times your money or more…

“As quickly as the next five years.

“Think about it: Even if you’re already in your 60s, a score like that could take you from “zero” to “multimillionaire” before you get your first Social Security check!

“Though I have no doubt it’ll soon be GE-sized, this company is still relatively small…

“So it would be totally unethical of me to broadcast its name in this alert.

“Why?

“Because the evidence you’re about to see is so persuasive that millions of investors would pour billions into this stock if this bulletin went viral…

“Which would send this company’s share price into the stratosphere.”

Even if this turns out to be a stock I like, I’ll take the “under” on “will you make 100X your money in the next five years” … but that’s not what we look for here at Stock Gumshoe, of course, we try to look past the hypetastic promise and see if there’s a real stock with real potential hiding under there. After all, even the more pedestrian goal of doubling your money in five years is probably going to mean you’re beating the market.

So what exactly is Michalski teasing as Nicholas Vardy’s pick for us?

“Get in position AHEAD of a manufacturing innovation that’s more revolutionary than the assembly line”

Uh oh. Sounds like we’ve got yet another in the long line of 3D printing teasers. Not that there’s anything wrong with that.

He uses the same kind of imagery that most teasermeisters use while pitching the dream of 3D printing — instant creation of custom parts, as with a new aluminum wheel for your pickup truck that’s made in the back room while you wait….

“Very soon, instead of being shipped in from giant Asian manufacturing centers, at great expense to consumers and the environment…

“All manner of things — even surprisingly complex machines — are going to be made to order in minutes, on the spot, all across America.

“It’s like something out of a science fiction movie. Only this is real.

“It’s called ‘freeform fabrication.’

“Actually, because this technology is so new and cutting-edge, it’s called by several different names…

“But I think ‘freeform fabrication’ is the most fitting description of what it does.”

And then we get a good spiel about the technology itself, which is indeed very cool and which we’ve written about plenty of times before as the leading stocks really caught the fancy of investors over the past year or so:

“A quantum leap in the way things are made — and a seismic shift in the dynamics of global commerce

“To truly appreciate the impact freeform fabrication will soon have on our lives, I’ve got to give you the “Readers’ Digest” version of how it works.

“Like I said earlier, this process is still in the developmental phase. It’s being done in a bunch of different ways, which vary based on the materials being used.

“But in all of these variations, freeform fabrication has the advantage of being an additive manufacturing process — not a subtractive one….

“… freeform fabrication CAN make semi-hollow or intricate shapes-within-shapes — with unprecedented precision. For instance, this process can make lengths of chain without having to assemble it from links!

“The key to this is in the ‘additive’ nature of freeform fabrication.

“With this revolutionary new technology, successive layers of material are added to each other…

“Until the piece being made reaches the exact dimensions and specifications of the computerized blueprint guiding the process….

“a LOT of things will be cheaper and more readily available than ever before — and the dynamics of global commerce will be turned upside down.

“To speak plainly: China will no longer have such a stranglehold on manufacturing.”

And then we get a few clues about which of the 3D companies he’s touting:

“… a U.S. firm that could become the ‘Google’ of freeform fabrication….

“The U.S. firm he’ll reveal to you in Five Years to “Sayonara” is in the process of merging with a foreign rival that’ll give it access to 70 new markets abroad…

“Beyond that, this company’s got deals lined up with THREE major automakers — plus Caterpillar, Honeywell, Xerox, 3M, and tons more.

“Their technology is tip-of-the-spear, too. In fact, they recently freeform fabricated a full-sized custom motorcycle.

“I’m not kidding. Nick showed me the video of it actually starting and running!

“Incredible, isn’t it?

“You just HAVE to get in on a company that can do that — especially since Wall Street seems more or less clueless about it…”

Well, interestingly enough, Michalski does say that Vardy has been recommending a few different in and out trades in the 3D printing space over the past year or so … but this time around, he’s teasing a different stock than Vardy last pitched as a 3D printing winner. Last time out, Vardy’s tease for the “third industrial revolution” over the Summer was for 3D Systems (DDD), and today he’s instead teasing their major competitor Stratasys (SSYS).

The two stocks have had very similar performance over the past several months (and, indeed, over the past year, though over a couple years DDD has generally been a somewhat better growth stock), and they do basically the same thing — they sell 3D printing machines and materials that turn 3D computer images into physical objects. Like that motorcycle that was teased (you can see the video here, too, if you like).

And SSYS has indeed merged with a major foreign competitor, that merger with Objet was announced about six months ago and just closed last week. The various technologies offered by these different companies are all slightly different, whether it’s the ability to work more in slightly different materials or different colors in one “print” job, or to create items at different speeds and of different size and strength, but they’re almost all focused primarily in producing prototypes in various types of resin and plastic, or casting molds that go on to be part of a more traditional manufacturing process. The manufacturing revolution is underway, it seems, but the “put China out of business” part is likely coming more slowly as new materials (like metals) are added to the mix, and as costs come down to the extent that producing one-off items becomes a feasible routine activity.

I wrote about these two companies for the Irregulars back in June, and my opinion is still pretty much the same — they’re both priced for growth and both growing, and I think both will probably continue to get outsize investor attention over the next year … and I still think that the Objet merger is likely to bring enough of a cost/integration challenge that I’d like to wait and get in on that stock after a dip. Both stocks have been fairly volatile over the last six months, I still do not own either (unfortunately — they’re both up by about 50% since I wrote about them), and both are expensive and in solid long-term uptrends so it’s been profitable recently to wait for down days to buy shares.

I like the story and the potential of this industry, but I don’t see a really good reason to pick one of the two leading companies over the other (or, indeed, to exclude the major 3D modeling software companies like Autodesk, ADSK, and Dassault Systems, DASTY), the “story” and the trend are good for both of the “printer” companies and I suggested looking at both back in June, so I’ll just “unlock” that older “Idea of the Month” article and you can see it here and build your own investment case for either, both, or neither. The PE ratios are absurd (60-80 or so), the growth rate is expected to be good but not spectacular, and a bet on these companies is a bet that they really are finally turning 20 years of incremental advances into a revolution that will dramatically increase sales volumes over the next few years.

So what do you think? Do you agree with Vardy that DDD was the pick in July but that SSYS is better now? Think both are too expensive, or both worth a leap? Let us know with a comment below.

P.S. Our charitable membership drive ends tomorrow — half of the subscription revenue goes to charity if you sign up before the end of the day on Wednesday, so if you’ve been thinking about joining or re-joining as an Irregular please do so by tomorrow!


Related Gumshoe Articles

Leave a Reply

31 Comments on "“You really could retire on this one stock* — even if you’re already in your 60s!”"

avatar

hedy1234
Irregular
419
hedy1234
December 11, 2012 4:23 pm

Quite a coincidence that Investment U’s Alex Green had an article on 3D today. He likes it.

Mr. T
Guest
0
Mr. T
December 11, 2012 5:10 pm
Both of these look pretty much the same (DDD & SSYS) to me. SSYS is a bit smaller than DDD and they both are really expensive right now in my opinion. I think these hyped up tech stocks are going to rollover soon, I am waiting for a nice big pullback and then I will buy DDD because I think they are the more solid of the 2 companies. Just my opinion but I am not a buyer of either right now and I have been watching them for awhile. My last buy on DDD was when it was $28… Read more »
Thomas
Guest
0
Thomas
December 11, 2012 5:10 pm

DDD looks like a nice Swing Trader on a dip. Will keep an eye on it.

John Harris
Guest
0
John Harris
December 11, 2012 5:20 pm
The technology is appealing enough to me that I bought a small position in both DDD and SSYS. These sorts with high P/E ratios admitedly carry risk of not growing and crashing back to normal P/E ratios of maybe a quarter of what they are (if not less) so I only buy a small position so I don’t have much at stake to lose. But if they are actully the ones that take off in the years to come, they grow into regular or very large positions. I got DDD on the reco of WSD Insider back at $22. They… Read more »
L. Hastings
Guest
0
L. Hastings
December 11, 2012 5:33 pm

Since an engineer friend of mine had already sold me on 3D and other computerized printing and manufacturing, I bought some of all three a couple of months ago.
I figure I’ll just hang onto them and see what happens. DDD is up almost 17%, SSYS is up over 12% and DASTY is a little better than even.
Glad I bought them.
I’m way to conservative to beat on one or two stocks, but a little of all for the long term was in my budget.

Jack
Guest
0
Jack
December 12, 2012 11:03 am
I saw this technology demonstration years ago where they made a piece of plastic that was designed to replace a gear for an auto part that was no longer available. It was made from the engineering drawings with the machine in a video demonstration that was all over the Internet within days. The 60-80 PE ratio scares me to death and I think it’s far more likely that China will remain the labor market of choice for the building of new products. I have seen the latest engineering software (a friend uses it to design high-powered flashlites) and you can… Read more »
Mark
Guest
0
Mark
December 11, 2012 5:38 pm
Just buy her the horse, what kind of Dad are you? In a few years you could just print one out. But right now you need to do it the old fashion way. Man up and buy the horse. I think one of the D printers companies will be the next apple. Buy it, wait 25 years then retire on it. I’m too old to do that. However I think this will take off. the timing is not right yet. On family game night you could buy and print a monoply game board with all the pieces, hotels and that… Read more »
twjd
Irregular
13
December 11, 2012 5:47 pm

I’m guessing the 3D printers use the software from ADSK and DASTY to operate?

CoolSoupy
Guest
0
CoolSoupy
December 11, 2012 6:00 pm

I too am out of the market until the “wimany lessons of life including resposability se” fathers in D.C. succumb to their normal kick
the can down the road mentality and we can get back to real investing.
However; as a Texan I can vouch for the wisdom of buying a horse or any other animal to teach children responsability and compassion for all of the Lord’s creations.

GO WITH THE HORSE !!!!!

CoolSoupy
Guest
0
CoolSoupy
December 11, 2012 6:04 pm

WOW – NO WAY TO EDIT BUT IT WAS THE “WISE” FATHERS IN D.C.

NOTE: TRAVIS HOW ABOUT A WAY TO EDIT AFTER PUBLISHING?

John M. Chenosky, PE
Guest
0
John M. Chenosky, PE
December 11, 2012 6:05 pm

This technology is what the Pattern Makers of old did. Essentially taking 2D drawing and with a hand and power tools create a “pattern” or sample out of wood, metal or other workable material. The sample modified is used in the production process.
Rhino 3D , Versacad the first CAD software and MicroSystems, all developed by Archway Systems of Huntington CA is probably in this mix but a private company since its inception. Not that anyone was interested.

Tony
Guest
0
Tony
December 11, 2012 7:27 pm

What is the moat for these companies? Are there any patents that they control? What’s to stop a company like HP or Apple or any other company with a boat load of money to push themselves into the industry once it heats up?

Barry
Guest
0
Barry
December 12, 2012 8:33 am

Like Paul, I have not owned DDD or SSYS but have been selling naked puts on both of them on a month-to-month basis as opposed to selling the longer term puts. My approach is just more conservative and certainly would not produce as much income but if the trend fizzles I do not have the possible consequences of longer term puts. Good luck, Paul and thanks for your insight.

barndoor
Irregular
14
barndoor
December 11, 2012 7:34 pm
I *am* an engineer and have used 3D printing services. IMHO DDD has better entry products but SSYS might scale better if this really is a ‘revolution’. There is also a rumor that GE is quietly working on their own (out of their aircraft subsidiaries for now) so as not to be left behind if there is a revolution. I follow DDD. I have never owned DDD but have been paid pretty well not to. I would gladly buy around $30 (it’s $47 today). Instead I’m just about to roll my Feb $25 puts (banking $1.40 for about the 3rd… Read more »
Beverly
Guest
0
December 11, 2012 7:39 pm

I agree – buy her a horse! I will admit though that I am a bit prejudiced in that I own a horse farm and breed and sell horses! However, really I got my two daughters into horses and it was the best thing I ever did for them for teaching responsibility, good sportsmanship, etc. i support my horses with stock investing!

gard
Member
198
December 11, 2012 10:51 pm

Seems to me that 3D printing is a niche market. Who needs one at home? You may be able to make parts but then you would need to assemble them. A revolution… I think not. An investment fad, probably, who knows?

Neil Hollingworth
Guest
0
Neil Hollingworth
December 12, 2012 5:09 am

I am with you on the horse Travis-Iown a dairy farm in New Zealand,milk 400 cows & inherited a horse through marriage,the cows make me money,the horse(s) over the 27 years have not, have cost in vet bills,wrecked fences & ongoing grazing bills.I really appreciate the information you give over to us unsuspecting investors that we get teased with on a regular basis through email-all the best for you & your family this Christmas & will look forward to your emails arriving in the new year .

Taz
Guest
0
Taz
December 12, 2012 5:24 am

DDD has many more patents.

GaryW
Guest
0
GaryW
December 12, 2012 6:47 am

3D printing is like the Internet hype of the 90’s. Back then the Internet was supposed to revolutionize everything, which conned a whole lot of investors right over the cliff… and none of them anticipated Google or Facebook. 3D printing WILL change how many, but not all, things are made, but consumers will not buy billions of 3D printers. SInce it’s a hot idea that has not run its course, ride the wave but carefully. Don’t confuse stock price with value.

Andrew, UK
Guest
0
Andrew, UK
December 12, 2012 7:18 am

Whilst it is undeniable that a lot of money has been made, and may yet be made from the interest in small 3D printers, I find it hard to get too excited about it. This 30 year old technology hasn’t really developed much from it’s introduction, apart from the availability of smaller affordable machines. The claims of “End of made in China” etc. come from people who have no understanding of manufacturing costs, processes or mechanical properties.

I think we may see disappointment creep in to the future SP.

jIM
Guest
0
jIM
December 12, 2012 10:09 am

A small position with options on DDD could be worth your while either short calls or selling puts could allow you to buy at a significant discount in volitity

rmsfly43
Member
0
rmsfly43
December 12, 2012 3:03 pm
There were a couple of articles on Seeking Alpha about DDD that questioned whether management had overstated the company’s organic growth via fuzzy accounting for all the recent acquisitions (DDD had been very acquisitive), channel stuffing, etc. I am not a CPA, and the accounting for acquisitions is complicated, but these articles did seem to raise some interesting questions. The articles seemed to have struck a cord because management felt the need to respond (via 8-K and analyst call). I wonder how many times that has actually happened. I think the technology will continue to grow and change the way… Read more »
niederbremer
Member
0
niederbremer
December 12, 2012 9:12 pm

Why do people focus on P/E so much? How do you know if the price is too high for the earnings or the earnings are too low for the price? HPQ has a P/E of 3.62. How’s it doing lately? INTC has 9.02. Not setting any land speed records. Check ROE, EPS growth, Debt to Equity, earnings surprises or glance at a chart.

Shoeless
Guest
0
Shoeless
December 17, 2012 9:08 am
In looking at the majors ,3D /SSYS, on the web I found low priced machines and an army of whiz kids doing magic stuff with the technology. Come to find out some of these whiz kids are doing outreach for help in breaking through the primary patents and to gain open architecture. One patent covering materials is awfully general and looks to me, as a layman, to be vulnerable. ” A patent is only good as the amount of money you’re willing to put up to protect it”. I was still interested and came upon ONVO (ticker) a company that… Read more »
Jan
Guest
0
Jan
December 17, 2012 10:21 pm

One question. Who makes the “ink” ?

That is the company I want to invest in.

CAJUNGUN13
Guest
0
CAJUNGUN13
December 18, 2012 12:03 am

Have bought ONVO as well and monitoring DDD.

Eph
Guest
0
Eph
December 18, 2012 10:13 am

Worth keeping an eye on and waiting for the dips.

Darko
Guest
0
Darko
December 28, 2012 3:51 pm

Check also Arcam on the swedish stock exchange (since 1 yr), small 3d printer manufacturer, huge growth potential. Lets profit from the hype

Dwight Fisher
Guest
0
Dwight Fisher
January 10, 2013 7:48 pm

“FREEFORM FABRICATION” I love this term. To me it is what most writers of these stock letters do.

Kelly O
Guest
0
Kelly O
January 28, 2013 12:17 pm

Does anyone know anything about Sigma Labs (SGLB)? Apparently they have developed a 3D printer called PrintRite3D™. I’m wondering if they are legit of if anyone knows anything more about them.

Thanks! I just found Stockgumshoe and it’s great!

wpDiscuz