Better Buy in 2013: 3D Systems Corporation (DDD) or Stratasys, Ltd. (SSYS)?

However, this vertical integration strategy is already beginning to experience some pushback from price-conscious DIY home hobbyists. The premium for 3D Systems’ ABS cartridges essentially subsidizes MakerBot, while encouraging the use of pirated materials and hardware hacks. If the goal is to expand consumer adoption, 3D Systems might be better served by upping its price on its printers and lowering the price on its feedstock.

3D Systems also has drawn analysts’ fire for pursuing a growth-through-acquisition strategy. In the opinion of this Fool, top-line growth through mergers and acquisitions is what you’d expect from a market leader struggling to erect a moat in a new industry. Microsoft Corporation (NASDAQ:MSFT) made 30 acquisitions between 1994 and 1998. Since 1998, eBay Inc (NASDAQ:EBAY) had acquired 38 different companies in 1999 alone.

If real estate is about location, location, location, then technology is about patents, patents, patents. Cheap competition means cheap patents, many of which will form the basis for later derivative technologies and, hence, lucrative royalty payments down the line. The company is already making its application programming interface, or API, available to developers to create a consumer app ecosystem grounded in its technology.

Conclusion
The question of which 3-D printing company is right for you depends on how much risk that you, as an investor, are comfortable with. Sticking strictly to the commercial and industrial engineering and design market makes Stratasys the more conservative play. Should the prices of 3-D printers continue to fall, 3D Systems is ideally placed to exploit the DIY consumer market. As always, investors are advised to do their own due diligence before making a decision.

The article Better Buy in 2013: 3D Systems or Stratasys? originally appeared on Fool.com and is written by Kyle Spencer.

Fool contributor Kyle Spencer has no position in any stocks mentioned. The Motley Fool recommends 3D Systems, eBay, and Stratasys; owns shares of 3D Systems, eBay, Microsoft, Staples, and Stratasys; and has options on 3D Systems.

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