Sigma LabsThe correction in 3D Printing Stocks has caused every publicly traded company’s shares to break key support levels with one exception: Sigma Labs (SGLB).  I believe there are 5 essential reasons that explain this fact that I will present in this article.

If you are new to this 3D printing R&D micro cap as many reading this probably are, I have articles and CEO interviews you’ll find by typing “SGLB” in the search box above.

 

1. New Institutional Investments in Sigma Labs

8.7 million shares of Sigma Labs were recently added to a mutual fund managed by Driehaus Capital Management. This is the first institutional investment in the company and I believe others will follow due to the next four reasons.
Sigma Labs

2. Fundamentals
Sigma Labs
While Sigma Labs is currently a research and development stage company (expected to change in 2014 with their key product launch), they have managed to generate revenue and have been operating at near break-even financially as they’ve developed their key product.  While Organovo Holdings is involved in 3D bioprinting R&D and not 3D metals printing R&D the comparisons below may not carry much weight to others. But they do to me for reasons I’ll mention below this table.

Metric

Organovo   Holdings (ONVO)

Sigma   Labs (SGLB)

Market   Cap (11/21/2013)

$ 718M

$ 107M

Revenue   ttm period

$ 693,000

$ 1,270,000

Quarterly   Revenue Growth yoy

- 95%

186.10%

Operating   Margin ttm period

-1,888%

- 96%

Net   Income ttm

- 39,840,000

-    370,000

Diluted   EPS ttm

- .63

0

Sigma Labs operates in the metals segment of the 3D printing industry which is the segment projected to grow the fastest according to most industry experts, including Terry Wohlers.  Also, with revenue generation accelerating (see above table) and their key product launch on deck, I think there is very strong potential for Sigma Labs to turn to profitability before Organovo Holdings, and I write this as an ONVO shareholder as well.
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3. Major 3D Printing Industry & Government Partners

How many penny stocks besides Sigma Labs have contracts and Joint Technology Development Agreements with companies and government institutions like the following?

GE Aviation: “GE Aviation Signs Additive Manufacturing Cooperative Agreement with Sigma Labs

Los Alamos National Laboratory:  “Sigma Labs Receives Contract From Los Alamos National Laboratory For Advanced Manufacturing Technology

National Institute of Standards and Technology (NIST): “Sigma Labs Part Of Team Awarded Grant Of $5 Million For Additive Manufacturing Research

and just this week,

Honeywell Aerospace: “Sigma Labs Awarded Contract Extension from Honeywell Aerospace for Additive Manufacturing

These are on top of a contract announced in May with a Fortune 100 company for up to $ 253,000 in additional revenue.

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4.  Share Price Appreciation Outperforming 3D Printing Peers with Volume Increasing

The chart speaks for itself….  chart updated 11/26/2013

  Sigma Labs Chart

 

They say “the trend is your friend”, and lately, Sigma Labs has a propensity to bounce off key averages rather than falling through them.

Being the only 3D printing stock to bounce off its 10 day moving average during the 3D printing stock correction of this week is about as bullish a sign as I can think of.

Sigma Labs stopped falling right at its 10 day moving average and began trading higher the next day.

and here, bouncing off the 30 day moving average…
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SGLB 30 dma
I believe this trend will continue as launch and commercialization of their key product, PrintRite3D gets closer.

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5.  Launch of Key Metals 3D Printing Product Next Year

There is one overriding factor that drives stocks higher- the launch of a key product or service which brings large and new revenue streams and (presumably) income into a company.  That’s exactly where Sigma Labs is now.

The company is anticipating launch of their patented PrintRite3D system (see “Go to Market Presentation) a non-destructive quality inspection system for 3D metal printing and other advanced manufacturing technologies.  It is the reason why GE Aviation’s business development leader for additive manufacturing Greg Morris said:

“Today, post-build inspection procedures account for as much as 25 percent of the time required to produce an additively manufactured engine component. By conducting those inspection procedures while the component is being built, GE Aviation and Sigma labs will expedite production rates for GE’s additive manufactured engine components like the LEAP fuel nozzle.”

The benefits in money and time savings as well as finished part quality using the real-time inspection process patented by Sigma Labs are obvious. Moreover, the technology will be applicable to the entire metal 3D printing market.

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Disclosure:   I am long shares of  Sigma Labs. I have not been paid by any company or any third party for this article.

Disclaimer:   See full disclaimer on left of page.

 

Gary Anderson……..Follow me on Twitter: @3DPrintingStock

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