Profit on the rise of 3D printing at home

3D Systems makes content-to-print solutions that allow production of  almost anything that you can imagine.  Through the use of CAD software a user can design a product, auto part, prosthetic limb, piece of art, hardware, tools or just about anything.  The 3D printing technology  has been around since the mid 1980's, however it was expensive, highly specialized and not commercialized on a large scale.  That is now changing with companies like 3D Systems selling products for professionals, small and medium sized businesses, as well as individual consumers.  

Recently, Travis Lerole, 30, made news when he "printed" and "fired" an actual handgun that he made on a $1,299 3D Systems Cube printer (pictured above) with $30 in materials.  There are ambitious entrepreneurs out there creating everything from modern art, home furnishings and women's shoe lines with these printers, and we will continue to see innovative uses for these 3D printers.  We like the growth story at 3D systems as they have demonstrated YoY growth of 43% for 2011 and 53% for 2012.   The current P/E ratio is a little over 100, but against 2013 earnings estimates of $1.05 a forward looking P/E is a more reasonable 45 for a company in hyper-growth mode.  The stock has been trading above it's 50 and 200 day moving averages and remains in an uptrend.  There may be some consolidation right now in the $45-48 range.  

We'd like to get into this position on a pull back, so instead of buying the stock outright we are selling Puts on the the company today.

DDD is trading at $47.46 right now, and we are selling the JULY 2013 $41 strike PUTS for .75 cents.  

We would likely have to buy the stock if it dropped below $40.25 before option expiration on 7/19/13, which would get us into this position at a 14% discount from where it is trading today.  In return we are going to pocket $75 of premium for selling the puts.  We are selling a relatively small number of puts right now, not backing the truck up on this trade yet.  If the stock continues to pull back we may sell more puts.  If it rises and the options expire, we keep the premium.