Buying This Small-Cap 3D-Printing Name
We plan to tiptoe into the firm as our small-cap portfolio outperforms.
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Wall Street
Today, we'll take a look at another stock that was suggested by a reader. That stock is Velo3D (VELO).
Velo3D is a Fremont, California headquartered metal 3D-printing technology company. The firm produces fully integrated software and hardware solutions based on its laser powder bed fusion technology. This technology enables the production of complex, mission-critical parts that traditional manufacturing methods cannot without a complete retooling.
The firm's flagship offering is the Sapphire family of 3D printers targeting clients in the space, aviation, defense, automotive and energy industries. Sapphire printers are powered by the firm's Intelligent Fusion manufacturing process.
Earnings and Fundamentals
In late March, the firm posted a Q4 GAAP EPS of -$0.54 on revenue of $9.4 million. For the full year, VELO produced a net loss of $71.362 million for a GAAP EPS of -$4.33 on revenue of $45.973 million. That top-line print was good for year-over-year growth of 12.1%.
At year's end, the firm had a cash position of $39.013 million and inventories of $27.083 million, putting current assets at $80.12 million. Current liabilities add up to $33.802 million including short-term debt of $6.305 million. That places the firm's current and quick ratios at 2.37 and 1.57, respectively, which does pass muster.
Total assets amount to $105.348 million, while total liabilities less equity comes to $67.192 million. The firm has another $24.71 million in debt labeled as longer-term. The firm has more cash on hand than it does debt of any kind. This balance sheet is solid, but cash flow is still negative. There will be pressure to change that sooner rather than later.
Guidance
For the full year 2026, Velo3D is projecting revenue of $60 million to $70 million, bringing the midpoint above the $63 million or so that Wall Street had expected. The firm sees sequential improvement in gross margin over the second half of this year. The firm had originally issued guidance that would have the company achieving positive EBITDA in the first half of 2026. That projection has been pushed out to the second half of the year.
The Chart
Readers will see that VELO broke out of a falling-wedge pattern of bullish reversal this February and immediately went about building a double-bottom pattern, also of bullish reversal. The stock has consistently found support at its 200-day SMA, which implies some legitimate perhaps institutional support at that level.
The indicators don't tell us much. Relative strength is neutral. The daily MACD is "meh" as the nine-day EMA is positive (short-term bullish) and the 12-day EMA stands above the 26-day EMA. That said, both of those lines still stand in negative territory, which tempers my enthusiasm. The pivot for the double bottom stands at $16.50. However, the 50-day SMA, currently at $11.60 is what I am focused on for now. Taking that line is key to increasing institutional interest and taking on the $16.50 level.
Wednesday's Intention vs Wednesday's Actual Trade
Intention: Purchase 50 shares of (SNAP) at or close to the last sale of $6.01.
Actual Trade: Bought 50 shares of SNAP at $6.03.
Thursday's Intention
I am going to tiptoe into VELO to try to catch a technical rise from the 50-day SMA up to the pivot at $16.50. This will not be a large trade.
Intention: Purchase 50 shares of VELO at or close to the last sale of $11.36.
Current Positions
Long 150 shares of (SOFI) at $15.988. Last sale: $19.68.
Long 125 shares of (OCUL) at $8.061. Last sale: $8.93.
Long 125 shares of (ONDS) at $9.4749. Last sale: $10.26.
Long 10 shares of (PLTR) at $145.03. Last sale: $144.53.
Long 15 shares of (RKLB) at $67.1653. Last sale: $76.74.
Long 25 shares of (INFQ) at $9.965. Last sale $15.86.
Long 75 shares of (SIDU) at $2.029. Last sale: $4.70.
Long 50 shares of (EVLV) at $6.0898. Last sale: $6.44.
Long 50 shares of SNAP at $6.03. Last sale: $6.10
Cash: $1.982.82
Portfolio Value: $11,306.90, +13.1% from inception on March 24.
Related: How the Evergrande Founder's $42 Billion Fortune Became a Guilty Plea
At the time of publication, Guilfoyle was long SOFI, OCUL, ONDS, PLTR, RKLB, INFQ, SIDU, EVLV and SNAP.
