Proto Labs (
could experience a 25% rise after reaching a new high.
3D printing industry
has gotten its share of buzz from investors this year. Many
believe 3D printing is a disruptive technology because consumers
will be able to print items as opposed to buying them from a
Though there is some truth to that mentality - and there is
certainly a ton of promise for 3D printing - I don't expect 3D
technology to be widely adopted for several years. Much like
first computer, 3D printers are too expensive for most people
right now. And commercial prominence is unlikely to occur until
price levels decline.
However, that's great news for Proto Labs … because they don't
sell 3D printers. The company owns 3D printers and charges
customers to use them instead.
This is a great business, too. Many small original equipment
manufacturers (OEMs) will use Proto Labs technology during the
design phase of projects. This eliminates up-front printer costs
Proto Labs is also willing to take small orders, which most
manufacturers are not willing to do. So engineers can fix design
flaws using only a few prototypes as opposed to ordering a large
Given this incredible niche, it's no wonder that PRLB is near a
new high. The shares look ready to motor higher too, given the
breakout from a recent consolidation phase.
PRLB had been stuck between $44 and $50 for much of this year.
However, the shares rocketed higher from this zone in April. The
50-day moving average (orange line) acted as a springboard that
also helped pushed the stock above $54.
This chart shows the price of
shares along with an important support line to
The breakout above $50 suggests Proto Labs is in a new bullish
phase. Though the 50-day moving average should continue to
provide support, I'd be looking for $52 to become a near-term
support zone (blue arrow).
Short-term traders can enter now, putting a stop just under $52.
Investors who hold stocks for the long term may want to wait
until PRLB pulls back to the 50-day moving average, although I
cannot guess as to what price that could be.
I expect PRLB to rise to $60 this month, although my price target
is $67 for 2013.
Equities mentioned in this article: PRLB IBM
Positions held in companies mentioned above: