The best advances in technology are the ones that disrupt societies and change industries. Ideas like cloud computing, the Internet and even tablet PCs have changed the modern tech landscape. Investors in funds which track these ideas, like the First Trust ISE Cloud Computing Index (Nasdaq:SKYY), stand to profit handsomely over the next few years, as these ideas take off. One new game changer technology is still in its beginning stages. Three-dimensional printing could be one of the biggest portfolio opportunities out there. The technology is quickly advancing and stands to make early investors quite a bit of money as the concept grows.

Guide To Oil And Gas Plays: We've got your comprehensive guide to oil and gas shales in North America.

Fourteen Percent Growth
While it may seem like science fiction, the idea of printing a 3-D model of an object from your home computer is quickly becoming science fact through innovation. These machines use a process where they "print" a three-dimensional object by depositing layers of material, usually ABS plastic, on top of each other.

Much like when computers made the leap from universities and government laboratories to homes, 3-D printers are on the verge of becoming affordable for everyone and are about to change the technology and consumer sectors. Improvements to the printers have brought down costs considerably. Three-dimensional printing machines used to cost millions of dollars and were once only available to large manufacturing companies, but now can cost as little as $1,000. That lower price point could finally begin making the devices seriously affordable for smaller businesses and individual households alike.

Those lower prices for the technology seem to be spurring demand. Already, 3-D printing has made inroads into manufacturing areas such as tools, small appliances and auto repair, as producers no longer have to create thousands of a product to recover fixed costs. Data from consultancy group IBIS shows that over the last 10 years (2002 to 2012) 3-D printing has grown by 8.8% annually. However, that growth will continue, as the costs for the machines dwindle. IBIS estimates that the projected average annual growth rate for 3-D printing devices through 2017 will be an impressive 14%.

So far, much of the demand for 3-D printing has come from the industrial world. However, that is changing too. Office supply and copy center store, Staples (Nasdaq:SPLS) recently announced that it will start allowing customers to begin 3-D printing using Mcor Technologies paper style 3-D printing. The move serves to legitimize three-dimensional printing for the masses.

Printing a Portfolio
Given that the growth in 3-D printing is just beginning, investors may want to give the sector a go. Surprisingly, the biggest firms in traditional document printing - like HP (NYSE:HPQ) or Xerox (NYSE:XRX) - have zero exposure to the industry. For portfolios wanting to get in on the action, investors need to focus on some unfamiliar names.

Fresh off its new merger with Israeli company Objet, Stratasys (SSYS) is now the largest 3-D printing firm with printers able to use 120 different materials. Another bonus for shareholders is that the newly merged company will keep its main office in Israel. That will save roughly $4 million in tax savings, which is pretty considerable, given that this is a small-cap company. The merger follows a very good quarter for the company, in which it reported record revenue. For investors, Stratasys makes a compelling buy in 3-D printing sector.

Cute ticker aside, 3D Systems (NYSE:DDD) is no slouch, either. The company collaborated with software firm Autodesk (Nasdaq:ADSK) last year in order to help drive down prices and make 3-D printing available to the general public. That included creating kits and printers that only cost $1,300. That lower price could help drive 3D Systems printers into more homes and small businesses. At the same time, the company producers a large share of revenue from print services, which is essentially leasing out 3-D printers to create prototypes and models on-demand.

Neither firm is particularly cheap on a metric basis, but could provide some much need momentum to a lagging tech portfolio.

The Bottom Line
What used to be science fiction is quickly becoming science fact. In 10 or 15 years, we will all have a 3-D printer in our house. For early investors, the revolution could bring big profits to a portfolio. Both Stratasys and 3D Systems along with smaller rival Proto Labs (NYSE:PRLB) make ideal picks to play the growth.

At the time of writing, Aaron Levitt did not own any shares in any company mentioned in this article.

Related Articles
  1. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  2. Investing Basics

    Building My Portfolio with BlackRock ETFs and Mutual Funds (ITOT, IXUS)

    Find out how to construct the ideal investment portfolio utilizing BlackRock's tools, resources and its popular low-cost exchange-traded funds (ETFs).
  3. Investing

    What Investors Need to Know About Returns in 2016

    Last year wasn’t a great one for investors seeking solid returns, so here are three things we believe all investors need to know about returns in 2016.
  4. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  5. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  6. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  7. Investing

    3 Things About International Investing and Currency

    As world monetary policy continues to diverge rocking bottom on interest rates while the Fed raises them, expect currencies to continue their bumpy ride.
  8. Stock Analysis

    Tech Stocks Vs. Financial Stocks in 2016

    Consider the arguments for allocating more of your investment portfolio to either the technology sector or the financial sector for 2016.
  9. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
  10. Stock Analysis

    Analyzing Sprint Corp's Return on Equity (ROE) (S)

    Learn about Sprint's return on equity. Find out why its ROE is negative and how asset turnover and financial leverage impact ROE relative to Sprint's peers.
RELATED FAQS
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center