Doubling Up on the 3D Printing Revolution

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.
Global stock markets recovered last week with the Dow Jones up 1.29% and the S&P 500 rising 1.41%. The MCSI Emerging Markets Index jumped 1.50%
Big gainers in your Bull Market Alert portfolio included biotech bets Novo Nordisk (NVO) and last week’s pick Medivation (MDVN), which ended the week up 4.81% and 3.80%, respectively. You also booked 71.18% in MDVN options on Friday in just five days.
 
Your “option-style” bets on European banks — National Bank of Greece (NBG) and Bank of Ireland (IRE) also had a big week, rising 4.17% and 3.14%. With the National Bank of Greece and Eurobank in merger talks to create Greece’s largest lending institution, you may see some big movement in the stock price this week. 
 
U.S Mortgage REIT American Capital Agency Corp. (AGNC) crept back above its 50-day moving average (MA) and is now back to a BUY. 
 
This week’s Bull Market Alert pick revisits this highly profitable 3D printing investment theme through Stratasys (SSYS) a Minneapolis-based market leader in the red-hot “three-dimensional (3D) printing” space. Recall that you’ve already made big gains in this area with 3D Systems Corp. (DDD), which you sold on Sept. 24 for a gain of 24%.  
 
As you know, “3D printing” involves designing an object on your computer using three-dimensional software like “Computer Aided Design” and then the “printer” actually manufactures the product right then and there.
 
3D printing reduces both the cost and lead time of production tooling or machining for manufacturing tools or low-volume production parts. Designers can produce new models in just a few hours, shaving weeks — sometimes months — from part production. Stratasys’ own RedEyeOnDemand service recently “printed” a full-scale model of a fully operational Harley Davidson-style motorcycle.
 
Stratasys recently solidified its leading position in the 3D printing marketplace when it completed a merger with Israeli rival Objet. By combining their technologies, the “new” Stratasys will cover more industries than either Stratasys or Objet could prior to the merger. The combined entity will boast revenues about 20% higher than rival 3D Systems Corp. and provide it with access to 70 international markets where its presence had been minimal. Stratasys’ client base now reads like a “Who’s Who” of the corporate world, and includes Caterpillar (CAT), Xerox (XRX), and Honeywell International (HON), as well as Adidas, Intel Corp (INTC), 3M (MMM), and auto makers like Jaguar, Bentley, and Mercedes.
 
Thanks to a combination of $7 million to $8 million of annual net cost synergies and between $3 and $4 million in annual tax savings, Stratasys expects the merger to improve cash earnings per share by the end of Q2 in 2013. The company forecasts annual revenue growth of at least 20%, non-GAAP operating margins of 20%-25%, and non-GAAP net margins of 16%-21%.
 
Stratasys stock has pulled back sharply over the past few weeks. That’s due in part because the stock was removed from the S&P SmallCap 600 index on Sept. 18 after the merged company no longer met the domicile criteria for inclusion in S&P US indices. But the stock has bounced and is now trading back up right at the cusp of its 50 day moving average. 
 
This offers you the perfect opportunity to buy Stratasys, Inc. (SSYS) at market today. Place your initial stop at $45.00. 
 
For potentially even bigger gains, I recommend the December $70 Call options (SSYS121222C00070000).

Portfolio Update

Bank of Ireland (IRE) gained 3.44% last week. IRE halted its retreat last week and even managed to pop above its 50-day moving average on Friday. IRE is now up more than 40% for 2012, as the Irish economy slowly regains its financial footing. IRE is a BUY.
 
National Bank of Greece SA (NBG) added 4.17% over the previous five trading days. National Bank of Greece made a friendly takeover bid for Greek rival Eurobank Ergasias last Friday. If the banks do merge, the resulting entity would be among the largest institution in southeast Europe, boasting $231 billion in assets. NBG is a BUY.
 
Novo Nordisk A/S (NVO) jumped 4.81% last week as it broke through its $160 price level, gaining to hit a new 52-week high. Last week, a Standard & Poor’s report also highlighted strong demand for anti-diabetes treatments for several years to come. NVO is scheduled to report earnings on Oct 31. NVO is a BUY.
 
American Capital Agency Corp. (AGNC) rose 0.87% and moved back above its 50-day moving average. The Federal Reserve’s recent stimulus announcement included the continued purchase of mortgage-backed securities. This action will have a positive impact on investor interest in the real estate investment trust (REIT) sector for some time to come. AGNC is scheduled to report earnings on Oct 23. Now above its 50-day MA, AGNC is a BUY.
 
Seadrill Limited (SDRL) gained 0.33% gain over the past five trading days. SDRL continued to trade sideways last week after its CEO announced he would step down. SDRL is relocating its management team outside of Norway in an effort to bring management closer to its operational centers. Although SDRL breeched its 50-day MA briefly on Tuesday, SDRL remained below it, and thus remains a HOLD.
 
Michael Kors Holdings Ltd. (KORS) gained 0.53% last week. Analyst firm William Blair initiated coverage on KORS last week issuing an “Outperform” rating while Piper Jaffray maintained is “Overweight” rating and upped its price target to $63 — nearly 18% above Friday’s close. KORS is a BUY.
 
CVR Partners LP (UAN) added 1.64%. UAN’s 50-day and 200-day MAs crossed recently, providing significant price support at the $25.75 level — a level from which UAN rose on strength last Friday. UAN is a BUY.
 
Medivation Inc. (MDVN) delivered a great opening week performance in your portfolio, gaining 3.80%. For more than two weeks straight, MDVN has made higher highs nearly every day. Citigroup also reiterated its “Buy” rating on MDVN and raised its price target to $70 — 19.5% above Friday’s close, and new 52-week high. MDVN is a BUY.
 

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