Mampilly’s “#1 Stock for 2020” — what’s this South Carolina disruptor?

By Travis Johnson, Stock Gumshoe, January 13, 2020

Paul Mampilly is out with a teaser pitch headlined “America 2.0” that I can only describe as “big patriotic optimism” — he thinks we’re at the point of beginning a new huge wave higher for the US economy as demographics, capital availability, and the “economic velocity” in the economy converge to generate big growth.

Which he thinks will bring the Dow Jones Industrial Average to 50,000 and eventually 100,000, and will help real estate double “in the months to come.”

He may end up being right, I have no idea, but what piqued my interest was his pitch about a special report that he’ll be providing to new subscribers:

“It reveals my No. 1-rated stock. It’s a little-known company that isn’t just positioned to profit from America 2.0 … it will be essential to building America 2.0.”

So that’s what we’re looking for today… what clues does he drop for us in his “special presentation?”

“… tell us more about this company, and why you think it will soar 1,000%.

“Paul: Sure. It’s a relatively small company based in South Carolina … valued at just $1 billion… But, it’s disrupting a $2.2 trillion industry… manufacturing.

“Manufacturing is the backbone of any economy, really. America is no different.

“Here’s the thing … since Henry Ford introduced the assembly line to the auto industry a hundred years ago … manufacturing has really remained the same. Sure, we’ve had robotics and computers make advancements … but there hasn’t been a disruption.”

I don’t know if I agree that the past 100 years have seen “no disruption” in manufacturing… but we’ll leave him to that opinion. What is this company doing?

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“This company is disrupting the auto industry … making better cars, faster. Housing is becoming cheaper. Even the health care industry is seeing massive advancements.

“It already employs 2,000 hardworking Americans who are churning out almost $700 million in annual sales.

“And the stock is about to take off.

“Right now, it’s trading right around $10.

“But I think it could soar to $50 … and then potentially even $100…. within the next few years…. As little as three years.”

And a few other hints:

“BlackRock just bought 514,000 shares of this company.

“Vident just added 404,000 shares.

“And Invesco Advisers just bought 8,000,000 shares.”

So who is this, dear friends? Thinkolator sez it must be 3D Systems (DDD), a stock that, along with its major competitor Stratasys (SSYS) went through a massive hype cycle about 6-7 years ago, when there was investor exuberance about 3D printing taking over the world (and when pretty much every newsletter publisher was teasing one 3D printing stock or another).

Things have been very, very quiet since that hype cycle fizzled out — 3D printing has continued to improve, of course, and has gotten dramatically cheaper (particularly at the low end, where you can now confidently give a clumsy 13-year-old a $100 3D printer that works better than the super-sexy machines of a decade ago), but the enthusiasm has remained dormant for the past four or five years, with both of those companies reporting essentially flat sales.

I haven’t paid a lot of attention to these stocks since they collapsed in 2014 when the promise of “we’re going to 3D print everything and revenue growth will surge!” turned into “um, the slow acquisition-fueled growth we’ve had for 20 years is continuing, actually, and we’re just puttering along… sorry!”

So what’s the story now? Well, the story of today is that the stock has been surging since January 8 — and I would wager that’s largely because of Paul Mampilly and this “#1 Stock for 2020” ad pitch, since his newsletter is low-cost and extremely well-marketed (this is an ad for Profits Unlimited, his $47 letter that’s used as a feeder for his high-end services)… though, to be fair, there is also a little bit of news on the R&D end, and there was also an analyst upgrade today (Craig Hallum, saying that “the shares should start to move higher given the narrative change to more of a focus on shareholder value.”)

Which is about as 2020-sounding as anything could possibly be: Moving higher based on a “narrative change.” That’s probably why the stock has been so volatile and failed to really get any traction over the past few years, because no “narrative” has formed about the success (or failure) of their attempt to grow — so perhaps now if they’re going to focus on “shareholder value” the narrative will change?

I wouldn’t bet on it — what will make DDD appealing to me again, if anything does, is revenue growth — the stock has been stuck at this plateau between $600-700 million in annual revenue for five years, and analysts don’t see that changing. I don’t buy the new “narrative” of increasing shareholder value by becoming more efficient — they’re too small for that to be enough to generate excitement. It could certainly help, of course, and if analysts are correct that they can get to 26 cents per share in earnings in 2021 without real revenue growth (by boosting EBITDA margins from the current 5% to 11%), then at $11 the stock is trading at about 40X what will soon be next year’s earnings.

Call me a fuddy-duddy, but I don’t think you should trade at 40X forward earnings because of a one-time recovery in margins as part of a long-running “turnaround” story, even if those analysts are right. You shouldn’t get a lofty valuation like that without either a rock-solid guarantee (like some utilities and strong dividend payers), unless you have revenue growth showing a clear sign that the business is growing and will continue growing… and currently, that average analyst forecast is that DDD, which had sales of $688 million in 2018, will drop to $627 million when 2019 is complete, then bounce back up a bit to $650 million in 2020 and $667 million in 2021. That’s not growth, that’s fluctuating around the same area where they’ve been since 2014.

So that’s my skeptical thinking based just on the financials and the forecasts I’ve seen, feel free to use it to balance Mampilly’s optimism that this will be a leader of the manufacturing revolution and could return 1000% in three years — but, of course, make sure to do your own research and make your own call. This is not about the business, which has been evolving for almost 40 years since DDD’s founder (arguably) invented 3D printing in the early 1980s, it’s about what investors will think about the business in 2020, and I have not studied DDD’s pipeline of products for 2020 or its current strategic plan, and claim no expertise on what investors will think in 2020. DDD has had exactly one period of very strong revenue growth in 30+ years as a public company, and that came from 2010-2015 and caused the one real spike the shares have had.

Frankly, I’m still inclined to think that 3D printing, which encompasses lots of different technologies, is a key technology and an important tool… but also that it is a niche product, not a mass market one, and the sector at both the high and low ends is more competitive than you might think (including the “unicorn” Carbon, which is likely to go public in the next year or two, and lots of other small 3D printing startups with slightly different technologies, but also giant HP), and that the 3D printing companies have usually traded not on fundamentals, which have been fairly uniformly weak for SSYS and DDD over the past five years, but on future hopes (new breakthroughs in metal printing, new medical and dental devices). Future hopes change a lot faster than numbers do, so the stocks will probably continue to be quite volatile.

The hope for the future is that 3D printing can eventually become as lucrative as 2D printing — which means that a lot of daydreams of success for DDD or SSYS are based on the idea that a move from using 3D printing to “prototype” products to using 3D printing to actually produce end products will create a vastly larger potential market… and, as importantly, create a larger market for materials and feedstock — which, as with ink for printers, are likely to continue to be high-margin profit centers for all the 3D printer companies.

And that is indeed where DDD is trying to do, they emphasize the early promise of their “production” solutions and services in their Investor Presentation… though I have no idea how this early potential will play out, or what the financials might look like.

And with that, I’ll leave it to you to make your call — we probably won’t hear an official update from the company until 4Q earnings are reported late in February, so are you “yeah” or “nay” on DDD? Prefer SSYS or one of the others? Think we’ll have another 3D printing bubble, or that this is the beginning of a real recovery in the shares after a long period of weakness? Or is this just another head-fake from businesses that have never done as well as storytellers imagined they could? Let us know what you think with a comment below… and thanks for reading!


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bobo
Guest
bobo

Actually its SSYS? He recommended DDD in the past but dumped it a long while ago. He’s also pushing VJET and Prodways,

Marc
Guest
Marc

SSYS is newer intro than DDD, but I believe SSYS isnt the teaser in Pauls ad because SSYS has already been added a while ago, while DDD has been added, then dropped and now I expect it to be added again, most obviously to me not so much because of ‘price’, or big investors, but because DDD is based out of South Carolina as Paul specifies. Lastly, is it really wise to jump on board before, during or after the big investors? Yeah, before right……cause investing after they do, puts you into a much higher risk factor, and 3D is… Read More »

Eugene Gee
Guest
Eugene Gee

Actually SSYS is in Minnesota, not South Carolina.

youwannabet
Member
👍72
youwannabet

I can confirm It’s DDD. I have PU subscription.

Philip Raczka
Guest
Philip Raczka

Thanks Travis. Glad you’re feeling better.

Da Zee
Guest
Da Zee

Joined today. Glad you re back, Travis

charlie1030
Member
👍59

Glad you are feeling better. I have seen this add and appreciate your providing the answer.
How would you rate this company as compared to a pre-IPO company whiteclouds 3d printing

Jean Denis
Guest
Jean Denis

Those few years ago when 3D printing was the hot new thing, I actually worked as an engineer with DDD printers in the field of medical device manufacturing. I found the machines to be fussy and not as good as competitors such as EOS. Most of the market is industrial users. Consumer market for 3D printers may gradually develop with successive generations that think and work entirely in the digital domain, because, for now, one also requires knowledge and skills to create the digital solid models that will become the printed object and only a few % of people will… Read More »

bob be
Irregular
👍4
bob be

Confirming that DDD was recently added to his Profits Unlimited portfolio.

Marc
Guest
Marc

You are correct, Paul’s teaser is DDD, and yes, its flat as can be. I know, because I was a subscriber of Paul’s, and its part of the ‘group portfolio’. I found that Pauls recommendations were solid only about 40% of the time, and also switched my investment strategies towards options day trading, which Paul’s recommendations do ZIP for. Thanks for all your articles and insights, they DO make a difference.

Marc
Guest
Marc

I must make a correction…I WAS a subscriber, not any more, so I am not sure if DDD is still part of Pauls ‘group portfolio’….I am aware it may have been dropped some time ago, but I held it and still do.

Ritam108
Member
👍86
Ritam108

Off subject, but can you share who you use for options day trading? Thanks

robert64
Member
👍14
robert64

Marc, please share who you use for options day trading

Andre
Member
👍45

TOS=Thinkorswim is quite good

onehunkytenor
Member
👍0

Welcome back Travis! Typo in the IQT: whehter. Cheers!

Roger Galvin
Guest
Roger Galvin

Glad to hear u are feeling better…..good to have u back!!!

Carbon Bigfoot
Guest
Carbon Bigfoot

Travis did you get a flu shot? In any case glad you’re back– hope the little Gummies are OK. I didn’t get a shot for the first time since they were first initiated. Seems I went to the doctor’s in August thought I got one, later it didn’t show on my electronic chart. I did not want to get an another. Great article as usual. I almost forgot about 3D printing. In the 80s I invested in 2D as a part of the first CAD System I bought– spent $40K. Did not want to be a missionary again. Did buy… Read More »

fabien_hug
Irregular
👍16
fabien_hug

Here is a comment from Withney Tilson from his today’s free letter, re 3D printers

There wasn’t a single publicly traded 3D printing company at CES last week, nor did I see any private ones (though I’m sure there were a few)… This is what the aftermath of a burst bubble looks like.

larry
Guest
larry

3D is pretty awesome but i’m much more inclined to buy the “engine” of most 3D products DASSAULT SYSTEMS INC, DASTY than the bright shiny car whos model will change next yeat. up 225% since I bought a big chunk.

Leo Graciano
Guest
Leo Graciano

I should have known you hadn’t been feeling well. I was ready for a PanMass Challenge contribution. Glad you’re feeling better.

Steve - The Options Coach
Member
👍16
Steve - The Options Coach

Welcome back Travis! Nice article. I’m not big on the 3D stocks, however, I like the 1 week options for selling Calls on DDD. The $11.50 Strike has a nice return for 4 more days. And with the way the market is moving I think a 4 day covered Call is safe. I would buy the stock at $11.22, sell the $11.50 and hope to get assigned this Friday. You can make .28 on the stock plus a .18 premium for a .46 return. if you get the stock at $11.22 thats a 4.1% return in 4 days. I’m glad… Read More »

funu50401
Member
👍2

3-D, I’ve been following this 3-D business for I guess at least 6 years, if not more. It’s applications and efficiencies are so obvious I just can’t figure out why the few stocks which represent 3-D entrepreneurs have not turned into “rocket” stocks. For the reasons given, I holding on, hoping I’m merely abiding an event. Chuckle-chuckle.

narr01
Member
👍71
narr01

I believe the problem for pure play companies like DDD and SSYS is that larger players like Hewlett Packard, General Electric and Protolabs also can easily ramp up 3D printing when the demand is there. DDD and SSYS do not seem to have an intrinsic advantage over the bigger players.

jflynch
Guest
jflynch

I jumped into the 3D idea…bought DDD, SSYS….lost money…not interested now….I did like the idea but it was not a big deal as pushed….

jflynch
Guest
jflynch

I’m now trying to figure out which MJ Marijuania stocks will do better in 2020. I own 4, one of which is ACB. Does anybody own CTST? CTST is dogged low as they had their license suspended for awhile so I may take a risk on them….care more about ACB…all my MJ stocks are down…other stocks went up. Hopefully 2020 will be better….glad you are over the flu…Travis.

BloodSugar
Member
👍0
BloodSugar

Why you think the recent surge is mostly due to Paul’s teaser? The stock raised about 2 7% since he released the teaser, and I don’t think he has the power to push such rally.

ronwill
Member
👍91
ronwill
dazza06
Member
👍48
dazza06

Im becoming more and more convinced the angle to take with Cannabis is the medicinal one; there really is no “black market” of sorts here, as these involve extraction processes plus FDA approval (overseas equivalents too..) etc…..there is the regulatory risk here as licences have to be issued with strict guidelines etc…but you arent seeing blokes down a alleyway trying to formulate home made versions to export now are we..!

Happy
Member
👍2
Happy

Yup. I subscribed to Profits Unlimited and already made what I paid for the subscription and more. I think Paul is the real deal.

mike hulsey
Member
👍0
mike hulsey

I like your logic.

mary t
Irregular
👍0
mary t

You have been missed. I back check many suggestions given against your opinion too

scriptviewer
Member
👍-4

Not DDD
Its PH I’m a subscriber

Buck
Guest
Buck

Maybe DDD will print a 5G router and this newsletter ‘pusher’ can pump the convergence of 5G and 3D printing. Sounds like a catchy ‘narrative’. Perfect for WS…

erug
Member
👍16
erug

Can only play the dip and hope not the last one holding the bag. Defintly won’t be a pig on the short side.

Cheshire Lee F
Guest
Cheshire Lee F

I invested in DDD and SSYS in late 2017 and mutual fund in 3D. Ho Hum. Not a very good investment since 3D is a tech tool used by many companies, and as you pointed out, by HP. There is no good way to ride the 3D wave, ie. a single company IMO. Your analysis is excellent.

MADHU
Guest
MADHU

Is DDD still a good option to go far ???

rem1224
Member
👍0
rem1224

DDD is in Paul’s current PU model portfolio with an entry date of 1/7/2020 and entry price of $8.81

Connie
Guest
Connie

I’m new at all of this stock/investing. Where do I start?

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