I get it, people love their story stocks. I mean, it’s fun to sit down and tell your friends about this new trend that’s developing in the world and letting them know how to get in on the action. It’s an ego thing. You’ve hunted, done your research, and found something that’s going to revolutionize the world. You’re going to be rich, the world just hasn’t caught up with you yet.
You see, there’s only one problem with this theory. What happens if the market just never agrees with you? Then you’re stuck holding the bag on a “woulda, coulda, shoulda.” Or, even worse, Wall Street has already gone nuts about the story, and rather than selling out, you held out because, “it’s gonna go even higher.” You start buying up shares, get sucked into a value trap, and years later you’ve got ten thousand shares of regrets.
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Today’s Bear of the Day was supposed to be this “revolutionary technology” that changed everything. Rather, 3D Systems (DDD) is a warning tale for what not to do. 3D Systems operates as a provider of 3D printing centric design-to-manufacturing solutions. The company 3D printers transform data input from the format generated by 3D design software to printed parts using integrated, engineered plastic, metal, nylon, rubber, wax, and composite print materials.
As much as people want to talk negatively about timing a market or timing a stock, timing makes all the difference in the world. Timing isn’t just a charting function. You can use timing to your advantage by taking a look at our Zacks Rank. Remember, the Zacks Rank looks favorably on stocks where analysts are aggressively moving their earnings estimates in a positive direction and looks unfavorably on stocks where analysts are dropping their estimates.
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If you’re in love with the story behind 3D Systems and want to buy the stock there is a simple timing mechanism you can use to help minimize your risk. Wait for the Zacks Rank to begin to turn around from the Zacks Rank #5 (Strong Sell) the stock is now. This helps give you the best chance of catching the turnaround in the stock.
With regards to the estimates on DDD, analysts have been dropping their numbers for the current quarter, next quarter, current year, and next year. The bearish sentiment has dropped our Zacks Consensus Estimate for the current year from a 7 cent gain to a 12 cent loss. Next year’s numbers have gone from a 34 cent gain to an 8 cent gain. If you think the analysts are way off, maybe you’re right, but consider this. The last four quarters in a row, the Zacks Consensus Estimate has been off by an average of 4 cents. But that 4 cents has been over the reported numbers. So if anything, estimates have been optimistic.
3D Systems is lumped into an industry with Apple (AAPL), Lenovo (LNVGY) and HP (HPQ). None of these stocks has a rank greater than a Zacks Rank #3 (Hold).
Be sure to click FOLLOW THE AUTHOR above to stay on top of all the hot momentum stocks at Zacks.com. David Bartosiak is the Momentum Stock Strategist with Zacks, editor of the Momentum Trader and Home Run Investor, and host of “Trending Stocks”
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LENOVO GRP LTD (LNVGY): Free Stock Analysis Report
HP INC (HPQ): Free Stock Analysis Report
3D SYSTEMS CORP (DDD): Free Stock Analysis Report
APPLE INC (AAPL): Free Stock Analysis Report
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