Investing In 3D-Printer INK Manufacturers
Date

September 30, 2013

Category

Electronics, Manufacturing, Retail

Last week, I drew a detailed comparison between the evolution of timepieces and personal computers.
I asserted that by looking at the historical progression of clocks and watches, we could accurately predict future trends in consumer technology…
On the surface, it might sound a little out there.
But the truth is you can actually tell a lot about the future by looking at past market trends.
For instance, just a few weeks ago I compared two chemical plant explosions that occurred decades apart to predict the movement of Micron Technology Inc. (MU). I told subscribers that Micron’s valuation would get a bump from memory chip pricing concerns.
It looks like I was right on the money…
mu performance
Today, I have a different piece of history to share. And this one is as straightforward as it’s gonna get.
Apples to Apples
The chart below represents global revenue for the inkjet printer industry between the years 2003 and 2008.
injet revenue
One of the first things we notice is that industry sales doubled over this six-year period, from about $1.5 billion to $3 billion. That’s pretty impressive.
But it’s certainly not the heart of the story.
If we break down the printing industry during this time, we see something interesting unfolding: While printer sales were seeing minimal gains, the growth in ink and media was simply massive.
The reason for this is quite simple. Complementary goods and supplies offer consistent streaming revenue, while hardware eventually saturates the market.
Once everyone had a printer, demand for hardware diminished, and demand for supplies grew.
This forced original equipment manufacturers (OEMs) to gouge ink prices to make up for diminished printer sales. (If you’ve purchased an ink-cartridge within the past decade, you are well aware of how much these companies have been ripping off consumers.)
Fortunately for individual investors like us, there’s a unique way to profit from these gouging tactics…
 
Third-Party Suppliers
In the time range represented above, investors in this space saw gains of approximately 900%, 590%, and 380% from third-party suppliers — including Peerless Systems Corp. (NASDAQ: PRLS), Ikonics Corp. (NASDAQ: IKNX), and Transact Tech (NASDAQ: TACT), respectively.
These companies provided essential components for the inkjet industry including inkjet cartridges, inkjet films, and digital imaging.
Because OEMs like Cannon, Dell, and Epson were driving up prices, it allowed third-party suppliers to penetrate the market with competitive pricing.
Why is this important?
The same thing is going to happen with 3D printing — and we all have an opportunity to get in on third-party suppliers before they spike.
If you’ve been following the hype, you know how incredibly well 3D printing companies have been doing on Wall Street this year.
But in all practicality, that kind of growth can’t last forever. The ridiculous gains that we have seen from 3D printing OEMs are coming to a close.
It’s probably why my colleague Nick Hodge and his readers recently closed out positions for triple-digit gains in this space.
It’s also why Brian Hicks has been blowing up my inbox with questions about 3D printing materials.
Brian established a position awhile back and is already up. I’m actually regretting not getting in right away myself.
We’ve been talking about how essential these suppliers are going to be for this booming industry, and we’re already eyeing some key players.
To be honest, I’m not yet sure when we’ll be ready to share this information. It could be in a few more weeks, or it could be a few months down the line…
I’ve already spent more hours looking into this than I’d like to admit, but I want to have every little detail before we decide to recommend anything our readers.
In any case, you’ll be among the first to know. So stay tuned.
 
 
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