Print Me a Heart Valve, Stat!

20 years ago, I was a sophomore in college. I had a phone in my dorm room (connected to the wall by a cord) but I did not have a computer. If I needed one, I went to the computer lab on campus. I did not have an email account until my senior year. That same year, I distinctly remember my chemistry professor telling the class about this crazy thing called “the World Wide Web.” Fast forward 20 years and here I sit, with a tiny device that fits in my pocket and is a portal to the collective knowledge of the human race. And if for some reason I can’t get an answer to something in less than 3 seconds, I go ballistic. If you haven’t seen Louis CK’s bit about “Everything’s Amazing and Nobody is Happy,” you have to go to YouTube right now and watch it. I’ll wait.

20 years ago an iPhone would have seemed incredible, yet now they are ubiquitous and more essential to life than oxygen. On the few occasions I’ve left mine behind at home or at the office, I panic like I’m in one of those dreams where you suddenly realize you’re at the grocery store with no clothes on. I mean, it wasn’t that long ago that I routinely traveled around with NO PHONE AT ALL, oblivious to the perils that such a situation engendered.  

So what do these musings of mine have to do with finance? Nothing. But I was reminded of how fast technology moves when someone asked me about 3-D printing the other day. I’ve heard a little about it on NPR, but I’m not too familiar with the technology, so I did a little online research (ah, Google, another thing I can’t live without). In a nutshell, it’s a Star Trek-like technology that pretty much allows you to print an object. As in, one minute there’s nothing, and the next minute BOOM there’s a pen. (I’m sure it takes longer than a minute, but you know what I mean.) Apparently, the technology has been around for about 30 years, but it’s only now becoming inexpensive and accessible to consumers. There are practical applications for something like this in manufacturing, architecture, and medicine, but also in the consumer world. One that sounds totally awesome is the ability to download data from the web that would allow you to build a spare part for something that is no longer manufactured anywhere. In your home! Or, instead of shipping a product to a far-away destination, the data could be sent digitally to a printer that makes the product locally. How cool is that?

Most of the companies at the forefront of this technology are small-caps. Fewer analysts follow small-cap stocks, and research reports are scarce compared to the companies we follow in our coverage universe. This makes it difficult for me to formulate an opinion on the stock of small companies like these (for as you know, just because you like a company and/or its product, it doesn’t necessarily follow that the company’s stock is a good investment). I think 3-D printing is amazing technology and I imagine the applications will be myriad, but at this stage in the game much of the investment landscape is speculative. When buying individual stocks, our focus is on established, shareholder-friendly companies with strong balance sheets, positive fundamentals, attractive valuations, and good prospects for earnings growth and total return.

Sarah DerGarabedian, CFA
Director of Research

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