Why I'm Buying Shares of Proto Labs Inc. in 2015

The field of 3D printing has an absolutely amazing runway for growth. Wohlers Associates -- a leading industry voice -- predicts that over the next five years, spending on 3D printing will balloon from roughly $4 billion today to $21 billion in 2020.

What's even more interesting is how fast Wohlers' predictions have ramped up. Here's what fellow Fool Steve Heller found out from Wohlers Report 2014:

Source: Wohlers Report 2014, Fool.com's Steve Heller..

That might easily lead the average investor to think that by simply investing in leading names in 3D printing, they're getting a sure-fire winner. But in an excellent piece by Heller, he points out how this could be exactly wrong:

"Given the industry's strong growth trajectory, likelihood of increasing competition, key patents expiring, and threat of technological disruption, investors shouldn't rule out the possibility that profits may be difficult to come by for 3D printing companies in the long run."

At the end of the piece, Heller suggests that by focusing on companies that provide 3D printing services -- instead of the printers themselves -- investors could gain some measure of safety. After all, if technologies are changing and prices come down, service providers can easily adapt to the newest technology without really missing a beat.

I'm taking Heller up on his advice, and starting a position in Proto Labs in 2015. Beyond the fact that, as Heller points out, investing in a company that provides printing services seems safer, I have two big reasons to believe my investment will outperform the market over the next five years.

The "Amazon of 3D printing"If forced to explain to someone what it is that Proto Labs does, I would simply say that it is like the Amazon of 3D printing. That may sound a bit odd -- and hyperbolic -- but let me explain.

What Proto Labs actually does -- making rapid-injected molds with standard manufacturing materials for prototypes that engineers need in short order -- isn't all that complicated. The company also recently acquired Fineline Prototyping to bolster its 3D printing capabilities.

But again, there are lots of companies that already do this. In fact, the industry for such services is largely dominated by mom-and-pop operations. The same, however, could be said of Amazon: At its core, all it really does is procure whatever you order, and have it delivered to you.

An inside look at Proto Labs' manufacturing facility where products can be printed and sent back to the end user in just one to three days. Photo source: Proto Labs.

But there are two things that set Proto Labs apart from the rest of the fractured industry. First and foremost, it is ridiculously convenient for engineers. All one has to do is upload his or her design, send it to Proto Labs, receive a quote -- and the very next day, the prototype will be shipped back to the end user. For Amazon Prime users, such convenience should sound awfully familiar.

But beyond such laser focus on customer service, Proto Labs has one other ace in the hole. The company's proprietary software -- which has been evolving since the company was founded in 1999 -- is what makes the whole process so convenient. Engineers know that by using Proto Labs' software, they will be able to get a quote and prototype faster -- and usually cheaper -- than anywhere else in the industry.

Leadership knows what it's doingProto Labs was founded by Larry Lukis in 1999. Back then, he was a frustrated employee for a copying machine company called LaserMaster. The reason he was so frustrated was that it took far too long to get injection-molded prototypes back from manufacturers. He thought there had to be a better way... and Proto Labs was born.

Lukis still sits on the board of directors, and owns about 10.8% of shares outstanding. But the new head of the company is CEO Victoria Holt. Though Holt has only been on board since February of last year, she has shown that she understands what makes Proto Labs special. According to the Minneapolis/St. Paul Business Journal, "In just three months,Vicki Holt... met with a dozen customers, more than her predecessor Brad Clevelanddid in 13 years."

For a company that counts its brand name and customer service among its most important competitive advantages, that type of approach is music to my ears.

The article Why I'm Buying Shares of Proto Labs Inc. in 2015 originally appeared on Fool.com.

Brian Stoffel owns shares of Amazon.com. The Motley Fool recommends and owns shares of Amazon.com and Proto Labs. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.