Stratasys (SSYS) Message Board

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Technology Stocks : Stratasys (SSYS)

SSYS 9.450

-4.0%

Nov 6 3:59 PM EST

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To: Brian VanHiel who wrote (74)	2/21/1997 3:10:00 PM
From: Stratajema	of 316

Brian. I don't advise shorting a stock like Stratasys which exhibits a long-term uptrend and strong price support. In addition, there is no deterioration in their fundamentals nor business prospects. But MOST IMPORTANT, this stock is still one of the street's small cap favorites and so there is great "psychological buying support" for the stock above $15. As you probably have noticed SSYS doesn't hang out at any particular price point for very long and so it is a great stock to play the volatility on. I have learned that the best volatility players often play stocks from both directions meaning they will commit to either a long or short position at various times even when a stock is in a long-term uptrend. I choose to play it somewhat safe by taking a long position at $14-$15 and selling at $20-$21. I have caught $20 of upside profits by playing this game. If you short this stock, you have to be ready to cover quickly since this stock often reverses direction by a large percentage within a couple of hours! Today's price decrease was caused by a spill over effect from 3D Systems (TDSC). While I fully expected 3D to earn .14c to .16c in the 4th quarter, I was very surprised by the decrease in their current backlog. It's important to remember that 3D's share price is greatly influenced by it's net income since it has a mature product line and it's sales growth rate is under 25%. By comparison, SSYS's share price is greatly influenced (at this point in time) by their sales growth rate of 100% and the market acceptance of their new products. It's interesting to note that 33% ($3.3 million) of 3D's backlog is comprised of orders for the Actua modeler. This fact along with the decrease in their overall backlog seems to indicate that 3D's SLA laser systems have reached a temporary saturation point. (I had this same fear with Stratasys's FDM machine in the 3rd quarter.) Also, it's important to remember that the backlog for the 3D's Actua modeler represents pent-up demand caused by the delay in its availability. I feel 3D's stock is a bargain around $8.50 to $9 but I expect the fund managers to fight like hell to keep it above the all important $10 line. Excluding overall market influences, Stratasys's share price will be most vulnerable to downside selling pressure in late March just before they announce their 1st quarter sales. (Tooling stocks generally perform the worst in the 1st quarter.) However, any selling pressure at that time will quickly turn into a buying spree when they announce the general availability of their 8000 machine or the development of a metal prototyper. Regards, David

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