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. Mutual Funds & ETFs

    ETF Analysis: PowerShares FTSE RAFI Emerging Mkts

    Learn more about the PowerShares FTSE RAFI Emerging Markets ETF, a fundamentally weighted fund that tracks emerging market equities.
  2. Mutual Funds & ETFs

    ETF Analysis: iShares Cali AMT-Free Muni Bond

    Learn more about the iShares California AMT-Free Municipal Bond exchange-traded fund, a popular tax-advantaged ETF that dominates its category.
  3. Fundamental Analysis

    10 Major Companies Tied to the Apple Supply Chain

    Apple has one of the best supply-chain models. Here are some of the top businesses involved, and the benefits and challenges for all.
  4. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Emerging Markets Dividend

    Learn more about the SDPR S&P Emerging Markets Dividend Fund, a yield-focused exchange-traded fund tracking global emerging economies.
  5. Mutual Funds & ETFs

    ETF Analysis: First Trust Dow Jones Global Sel Div

    Find out about the First Trust Dow Jones Global Select Dividend Index Fund, and learn detailed information about characteristics and suitability of the fund.
  6. Term

    Why You Should Consider Investing In the Tech Industry

    The technology industry offers huge investment opportunities.
  7. Mutual Funds & ETFs

    ETF Analysis: U.S 12 Month Natural Gas

    Learn about the United States 12 Month Natural Gas Fund, an exchange-traded fund that invests in 12-month futures contracts for natural gas.
  8. Mutual Funds & ETFs

    ETF Analysis: iShares Floating Rate Bond

    Explore detailed analysis and information of the iShares Floating Rate Bond ETF, and learn how to use this ETF as a defense against rising interest rates.
  9. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraPro Short S&P500

    Find out information about the ProShares UltraPro Short S&P 500 exchange-traded fund, and learn detailed analysis of its characteristics and suitability.
  10. Mutual Funds & ETFs

    ETF Analysis: SPDR Barclays Investment Grd Fl Rt

    Learn more about the SPDR Barclays Investment Grade Floating Rate Fund, which tracks an index of highly rated floating debt securities.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  3. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  4. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  5. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  6. Lion economies

    A nickname given to Africa's growing economies.
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  5. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  6. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!