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Bull of the Day: Stratasys (SSYS)

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An industry that has been breaking into the mainstream as of late is definitely 3D Printing. This new manufacturing technique looks to jumpstart a production renaissance, and bring back industrial capabilities to small-sized firms, potentially revolutionizing a variety of businesses in the process.

3D Printing in Focus

This is because 3D Printing allows for customized, small scale manufacturing of prototypes or finished products in three dimensions from a digital model. The segment is still small, but with a variety of applications ranging from home produced tools and guns, to potentially ‘printing’ food and human organs eventually, it could have tremendous potential.

So for investors who want to get in on this volatile but very intriguing growth story early on, a look at some of the few companies trading in this spot might be a good idea. In particular, one of the industry leaders, Stratasys (SSYS - Free Report) , could be a very intriguing pick right now.

SSYS Under the Microscope

Stratasys, despite having a market cap below $6 billion, is easily one of the top companies focused on the 3D Printing market. The company makes 3D printers as well as the photopolymer materials that are used in the three dimensional printing process.

Although the sector saw some heavy selling following a bearish report from Citron research regarding a new competitor, SSYS has been a star performer in 2013. In fact, the stock has moved higher by nearly 45% in the YTD time frame, following up a 300% return over the past two years. And while some might be concerned about SSYS given this huge run, a look at the earnings picture suggests that this move might just be getting started.

SSYS Earnings

SSYS missed earnings by one cent in the previous quarter, but the two earnings releases before that thoroughly crushed estimates. In both of those quarters, SSYS delivered earnings surprises in excess of 330%, including an 820% beat for the quarter ending in June.

Estimates have also been moving higher for the coming years as of late too, pushing SSYS to strong predicted growth rates. The firm is actually expected to see 68% growth for the current year, and 44% growth in EPS for the year after that, so earnings look to grow a pretty strong clip for quite some time.

Plus, with some recent acquisitions by SSYS, such as Object and Makerbot, the company could be well-positioned for long term strength. This is especially true if the consumer market takes off, as Makerbot gives Stratasys a beachhead in this potentially huge market.

Given this strong earnings outlook and the incredible promise of the industry and SSYS in particular, it is easy to see why Stratasys is a Zacks Rank #1 (Strong Buy) stock. So, we are looking for more outperformance from this 3D Printing all-star, especially if the market takes off and becomes even more mainstream in the coming years.

Bottom Line

3D printing is a very small, but increasingly in focus industry that is seeing strong growth. Many companies in the space have seen strength, but after a bearish report on a competitor by Citron research, some might be skittish about investing in the space right now.

However, this doesn’t take into account some of the strong trends that a few names are seeing, such as in the top ranked SSYS. Not only does it have a solid history in earnings season, but its earnings estimate revisions and strong growth outlook suggest that this might be the best choice to get in on this surging industry.

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