Trade war news has been sending many stocks lower with the S&P 500 down 2.75% in the last month. But the trade war is actually a huge catalyst for the 3D printing industry, which is set to grow 122% in the next five years.
And that’s excellent news for the best small-cap stock to buy today.
On May 31, U.S. President Donald Trump said he would raise Mexico’s 5% tariff rate by another five every month until “the illegal immigration problem is remedied.”
It looks especially grim on the heels of trade disputes with China, another prominent manufacturing base for many U.S. companies.
U.S. automotive and electronics industries will be hit the hardest as this unfolds.
According to The New York Times, Mexico delivered $115.8 billion in autos, accessories, and parts to the United States through Mexico-based General Motors Co. (NYSE: GM) and Fiat Chrysler Automobiles N.V. (NASDAQ: FCAU) factories.
They also exported $36.6 billion worth of computers, TVs, and video tech to the U.S. last year.
Federal tax incentives will cushion some of this loss. In fact, Fiat Chrysler – a stock we’ve recommended countless times – is reportedly investing $1 billion in a Detroit factory, attributing it to a more than 20% decrease in the corporate tax rate.
But even so, production is hard to scale between international and domestic manufacturing efforts. A study by MIT said producing an iPhone in the United States, for example, could cost $40 more than it currently does overseas.
If global trade relations continue to deteriorate, with U.S. companies leaving China and Mexico, this will represent a pricing hurdle to some American businesses. At some point, U.S. companies will need to devise a more cost-efficient manufacturing alternative to stabilize prices and meet revenue targets.
Though it sounds like a crisis, it’s actually an exciting development for futurists everywhere. This will accelerate the shift to a cheaper, faster mode of production on the horizon: additive manufacturing – manipulating metals, plastics, and rubbers with no assembly line.
You might know it as 3D printing. And our top small-cap stock is the driver behind the majority of this market’s triple-digit boom.
Why 3D Printing Is Relevant Now
3D printing used to be just about designing non-functioning prototypes. Available materials were limited – mostly to plastic – and the technology itself was limited to large companies for research and development purposes.
Since its inception in the late 1980s, the technology has been further democratized. We now have access to 3D printers that fit on our desks. Of course, these aren’t the ones being adopted by large electronics and auto manufacturers, but it shows how far the technology has come.
Today, sizes actually range from miniature desktop units to units the size of a large car.
Wohlers Associates predicts the 3D printing market will see 122% growth in five years, from $15.8 billion in 2020 to over $35 billion by 2024. But it could see even bigger growth, thanks to the trade war.
Simply put, 3D printing is going mainstream. And the limiting of manufacturing resources should open many eyes to the opportunities and savings behind 3D printing, speeding the transformation.
In 2014, BBC reported a Chinese company 3D printed 10 houses in a single day, and each house costed less than $5,000 to produce. That was also the year Georgia Institute of Technology demonstrated the ability to 3D print functional electronics in the first electronics-purposed 3D printing platform.
It’s now 2019: 3D printing has created a $7,500 electric vehicle (EV’s typically go for no less than $20 thousand), the LSEV, now selling in Asia and Europe. And a group of BMW engineers was even able to restore Elvis Presley’s rusty 507 by 3D printing ancient parts that had all but vanished from earth.
Today, a broad range of materials, foods, and even body parts are capable of being 3D printed down to the finest detail.
And this small-cap stock is ready to soar with the 3D printing industry. In fact, this company has been ahead of the wave all along.
Its technology is used in almost every 3D printer around today. And since reducing its operating loss by 95% in five years, the company is well on its way to huge profits…
This Is Our Top 3D Printing Stock to Buy Now
Stratasys Ltd. (NASDAQ: SSYS) was an early pioneer of 3D printing. The company is responsible for developing and patenting fused deposition modeling (FDM) in 1988, which became a best-selling rapid prototyping technology in 2003.
Today, it’s one of the world’s largest 3D printing companies, selling 3D printers for aerospace, automotive, and medical prototyping.
3D printing might not make traditional manufacturing obsolete anytime soon, but it will dramatically lower logistics costs for manufacturers. Consumers will ultimately feel this effect.
Stratasys reports 92% cost savings on tooling for Volvo Construction Equipment by 3D printing functional prototypes alone.
Stratasys Executive VP Andy Middleton said that instead of manufacturing thousands of a product and shipping them out, 3D printing allows companies to “send data and print them exactly where they are needed.”
After developing and commercializing their FDM technology in the 1990s, Stratasys continued making bold and beneficial business maneuvers. They purchased IBM’s rapid prototyping intellectual property and hired 16 former IBM engineers, whose work resulted in the technology becoming a best-seller in 2003.
In 2010, before Hewlett-Packard (NYSE: HPQ) began its own 3D printing exploration, the source of all HP-branded 3D printers was none other than Stratasys.
The company continues to serve a range of big names in different fields, including NASA, Mclaren, Axon, and a host of universities and hospitals.
Stratasys has a market cap of $1.21 billion, large enough to contend with any foes in the market, many of whom are below the $1 billion mark. The firm even gobbled up an industry leader, Solidscape Inc., back in 2011.
Its stock currently sells for $22.73, but analysts say it could go up to $32 by the end of the year. That’s a 45% growth in six months, which is important, considering it hasn’t hit the $30 mark since 2015.
But the meat of this investment is not the short-run gain. The company is a strong bet for the future of the emerging additive industry. They have the competitive moats, executive finesse, and financial stability to carry out their vision.
On top of the company’s ability to make deals with small and large tech players, Stratasys lowered its operating loss by 75% in 2018, from $30.5 million to $8.8 million. What’s more, when you look at the last five years, operating loss has dropped 95% from $148 million in 2014.
That should tell you this company is well on its way to profitability in a key industry where the first movers have yet to break even.
And with the industry ready to explode 122%, expect Stratasys to be a major winner.
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Source: Money Morning