Nano Dimension (NASDAQ:NNDM) stock may be unfairly overlooked as several enticing electric vehicle stocks and celebrity special purpose acquisition company (SPAC) plays are dominating investor interest at the moment.
That said, this provider of intelligent machines for the fabrication of Additively Manufactured Electronics (AME), is an attractive investment here. In the last month, NNDM stock has fallen 21%. For the first time in a while, it’s trading at very attractive multiples.
For the full year of 2020, the company earned just $3.4 million, hardly the kind of figure that will have investors jumping for joy. The thing is, if you want to value NNDM, it has to be on prospects.
According to Statista, the market size for global 3D printing products and services is forecasted to surpass $40 billion by 2024, achieving a compound annual growth rate of 26.4% from 2020 to 2024.
Nano Dimension’s premier offering is its artificial-intelligence-powered DragonFly 3D printing system. The machine is designed to overcome the challenges of printing multiple layers of electronically conductive and dielectric materials at high resolution.
You can use the system to produce printed circuit boards, radiofrequency sensors, conductive geometries and molded connected devices. It operates within a niche of its sector — focusing on producing in-house PCB printing with a mixture of nano-conductive and dielectric inks.
There is a chance that other major 3D printing companies could become part of this niche as well, but at the moment, the company has the segment all to itself. That, above all else, makes it an attractive investment (and one that is trading at a discount).
NNDM Stock Has Had a Wild 12 Months
Few stocks have oscillated as wildly as NNDM stock has in the last year. Shares have a 52-week high of $17.89 per share and a 52-week low of 51 cents.
During this time, the Israeli tech company has done well to make hay while the sun shines. It has issued a massive amount of stock, raising a billion dollars of capital in the past year, a hefty amount coming from institutional investors, who now own approximately 10% of its outstanding share capital.
Renaissance Technologies is the biggest institutional investor in the company.
Its cash position now stands at approximately $1.5 billion. According to a recent release from the company, it has identified and studied 80 potential acquisition targets. Apart from these, the funds will help in organic growth through investing in operations and R&D activities.
Nevertheless, operating metrics took a beating due to the novel coronavirus pandemic. According to NNDM, customers held off on capital expenses this year due to the virus.
In the past three years, revenues increased at a steady pace. Hence, there is merit to the company’s argument that the next year could lead to a comeback.
In fact, Refinitiv tracks one analyst offering a revenue estimate of $5 million for fiscal 2021 revenues. In 2019, Nano Dimension reported $7.1 million in revenue. Hence, the estimate is conservative and achievable.
An Excellent Investment Trading at a Discount
Overall, Nano has an enviable war chest and strong growth prospects. Estimates will vary. However, it’s safe to assume the 3D printing industry will continue to grow at an exponential rate moving forward.
The company’s operating loss of $35.7 million is a momentary headache that should not cause you sleepless nights. Nano has the opportunity to disrupt the PCB market and carve out a lucrative niche in the 3D printing space.
Having said that, the investment does come with risks. During the first half of 2020, hardware demand fell sharply due to the delays in purchases and deployments. Market intelligence and analysis firm CONTEXT estimated an over 30% drop in hardware shipments in the industrial and design segments in Q1 2020 along.
We are also experiencing pandemic-related disruption to semiconductor manufacturing. Apple (NASDAQ:AAPL) delayed the much-hyped iPhone 12 launch by two months last year. Iconic automaker Ford (NYSE:F) forecasts a dent of up to $2.5 billion due to chip shortages.
Sony (NYSE:SNE) doesn’t believe it will hit sales targets for the PS5 this year due to the prevailing crisis. Microsoft’s (NASDAQ:MSFT) Xbox expects supply issues to affect it until the second half of 2021. Understandably, machines used for the additive manufacturing of semiconductors are massively in demand.
All things considered, the stock’s drop in the last month makes it the ideal moment to initiate a position in this one.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence.