Stocktoberfest 2012: 3D Systems Corp (DDD)
Wednesday, October 31, 2012 9:20 am
Here is a company that is showing promise. 3D printing is very popular as an investment theme these days and the stock chart shows the interest. Thanks to Chris H. for sending in this name.
Horowitz & Company’s proprietary Fundamental Scoring System (F|score) takes into consideration many factors related to each company’s financial history and outlook. This system is oriented toward a growth model and therefore will give a higher score to those companies which continually show increasing earnings per share and revenue over time. Over the long-run (and when looking to purchase a security) we prefer companies with a track record of growth and solid fundamentals. In the short-term however, it is price / technicals that pay. When investing, we combine both of these analyses to seek out possible investment opportunities within our universe of stocks.
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This stock ranks average in fundamentals and would not be considered an option that we would invest in the long-term. For those with a higher risk tolerance, it is possible to enter a speculative position with caution as this market has been much about bottom feeding on the worst of the worst companies. See below for details on where this company thrives and possibly some of the drawbacks:
We find that EPS Growth on a Quarter over Quarter basis is one of the strongest components when screening for growth stocks. Continued EPS Growth in a company generally shows strength in leadership, the ability to manage expenses and improve the bottom line. Over the last three quarters, this company has not done as well producing EPS Growth Rates last quarter, 2 quarters ago and 3 quarters ago 35.29%, -5.88%, 7.14% respectively.
Revenue Growth similar to EPS Growth is also a strong component to consider when screening and scoring for growth companies. Continued growth in revenue shows that the company is innovative, marketable and its products remain relevant in the marketplace. Over the last three quarters, this company has done exceptionally well producing revenue growth rates last quarter, 2 quarters ago and 3 quarters ago 57.34%, 51.67%, 62.69% respectively.
Last quarter this company reported Earnings per Share 19.85% better than analysts had expected. We believe this surprise, although only for one quarter, could set a trend for future earnings reports and guidance.
Price relative to earnings growth is commonly referred to as the PEG Ratio. This company’s price is further inflated than what we would like to see when compared against growth as its PEG Ratio is 2.50. We generally would like to see the PEG ratio under 1.5 and it is even better if it is under 1.0.
Horowitz & Company’s proprietary Technical Scoring System (T|score) takes into consideration both individual security technicals as well as the overall market direction when considering whether or not to purchase a company. H&C’s Market Trend Indicator (MTI) is a measure which is designed to evaluate the overall trend in the market. There are four designated levels to assess the trend which include: Strong Downtrend, Downtrend, Rally and Strong Rally. We are currently in an environment where the MTI is in a Downtrend.
All of our indicators are showing that the markets are attempting to rally out of a Strong Downtrend or have pulled back from a Rally. Although one should still remain cautious when purchasing individual securities, this may be the time for those with a higher risk tolerance to begin to enter the market or add to those positions with a high level of technical scoring. With that in mind, this stock ranks in the highest percentile of stocks from an individual security technical score. H&C would consider purchasing a small portion of this position even during a Strong Downtrend. This position would be a definite purchase if the market were to be in Downtrend or any kind of Rally.
Below are some of the key technical areas where 3D Systems Corp (DDD) excelled or detracted from the value of the T|score:
Stochastics are currently showing some bullish attributes which may mean this stock has some room to run in the short run.
Over the past two weeks, 3D Systems Corp (DDD) has crossed above its 50 day moving average. We see this as a bullish sign as the momentum is starting to change.
In terms of price and volume especially over a short period of time it is important to see if there is any weight behind either a rally or correction. The stock has shown to have less than favorable price and volume action and may have a higher potential to move lower if the overall market and economy are to trend lower. Higher volume with negative price also will provide resistance levels for this position if it were to rally back to these levels.
On a 12-month rolling period, this company has performed very well when comparing against its peers and equities in the S&P 1500. This is a positive sign for this company as it shows strength relative to the overall market.
H&C currently sees 3D Systems Corp (DDD) in a Short Term Uptrend and Long Term Uptrend.