Praxair (PX) has built its business around selling things that you can’t even see: industrial gases. it supplies hydrogen to oil refineries, carbon dioxide for soda, oxygen to make steel, and even nitrous oxide (better known as laughing gas) for anesthesiology.
It’s also the first and largest supplier of helium. Prices for helium are rising (no pun intended) as industrial demand for both gas and liquid versions of the element increases. Helium is used in everything from making fiber optic cables to filling party balloons. Praxair has seen its backlog increase to 2.5 billion earlier this year spurred by demand from the energy and manufacturing sectors. Its share price has appreciated steadily. With a beta of 0.86, it’s stable, though that comes at a price.
The shortage of organ donors means that 18 people in the US die each day waiting to get a transplant. That waiting list is more than 105,000 people and counting. In the future this gap might be bridged by Organovo (ONVO). The company is in the business of printing human cells and tissues with its NovoGen MMX Bioprinter. For now, the tissues created are used primarily in pharmaceutical research (ie. drug testing). Although full blown kidneys are still on the horizon, Organovo has the ability to create tissues from a patient’s cells which means lower risk of rejection.
The company isn’t profitable at the moment but it’s partnered with Pfizer and United Therapeutics and is growing its revenue stream. Investing in ONVO is still speculative but with time it could have astronomical returns.
3D Systems Corp.
Printing things really seems to be an extension of human nature. 3D Systems Corporation (DDD) has capitalized on lying between design and manufacturing. It offers an array of 3D printers for both personal and commercial uses ranging from $1,300 to $950,000. DDD seems overvalued at a P/E of 63.73 but there’s no doubt that this is a disruptive innovation that’s growing quickly.
The applications are seemingly endless from auto parts to orthodontics. Revenue from printers and print materials grew to over $150 million in the last quarter. But don’t get too worked up. Forecasted growth rates are fairly optimistic. Earnings are expected to grow 17.5% in the next 5 years. You have to ask yourself if this is what’s being priced in and how realistic these figures are.
More data and links for the names mentioned above:
1. Praxair Inc. (PX, Earnings, Analysts, Financials): Engages in the production, sale, and distribution of industrial gases primarily in North America, South America, Europe, and Asia. Market cap at $30.95B, most recent closing price at $103.79.
2. Organovo Holdings, Inc. (ONVO, Earnings, Analysts, Financials): Develops human tissue printing technology for creating tissue on demand for research and surgical applications in cardiovascular medicine and transplant medicine. Market cap at $87.98M, most recent closing price at $2.00.
3. 3D Systems Corp. (DDD, Earnings, Analysts, Financials): Engages in the design, development, manufacture, marketing, and servicing of 3D printers and related products, print materials, and services. Market cap at $1.9B, most recent closing price at $34.21.
Written by Freda Ding.
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