Sigma Labs Inc (NASDAQ:SGLB) Is Investing In CapEx, Indicative Of Long Term Strength

Sigma Labs Inc (NASDAQ:SGLB) is picking up some end of the week strength, and currently trades for just shy of $4 a share ­– still a couple of dollars off the late January peak but arguably a near term floor, and a level from which we think there could be some upside to be had if the company can push forward with its operational execution.Here's what happened recently, and what we're looking for next from Sigma.For those new to this one, Sigma Labs is 3D printing company based out of Santa Fe, NM. It's got a range of services and products on its customer tear sheet, but at core, it serves as a sort of third party contractor for manufacturing entities. 3D printing has been around for a while now, and it's become a staple of number of different subsectors of manufacturing. It's still very expensive, however, and the tooling and equipment required to carry out 3D is out of reach, or an inefficient capital allocation, for many companies.As has happened with lots of other technological advances in the manufacturing process, there's economy in scale, and Sigma Labs has set itself up to offer companies that don't want to tool up themselves access to 3D printers.And it's doing a pretty good job of it.The company generated a little over $1.2 million in revenues in 2015, and $642K during the nine months to September 30, 2016.For the past twelve months, however, Sigma has developed and is now rolling out a proprietary program that offers a sort of quality control element to its 3D printing contracts. It's called PrintRite3D, and it's offered as an upsell to all its contracts right now, and as a separate service that in-house printers can implement in their own facilities.We think this is going to separate the company form some of its competitors in the space (of which, as a side note, there are surprisingly few) and serve to boost top line near term.Sigma just announced a reverse split, an uplisting and a public offering at the same time (as of Feb 15, this press release) and is seemingly gearing up to accommodate the kind of activity boost we just alluded to. It's going to be a NASDAQ Capital Markets stock, and is looking to raise $5.8 million on the back of the offering. Of this $5.8 million, it should net $4.8 million, and $3 million of this net windfall is going to go towards the purchase of a bunch of new 3D printers and related software.In other words, this is a good old traditional manufacturing industry equity raise. The vast majority of the net proceeds are going towards capital expenditure investment. Anyone with knowledge of the manufacturing space will know that cap investment is a great leading indicator of operational strength, and we're falling in line with the implications of this in order to form our Sigma bias.Sure, a capital raise is going to be dilutive, and a reverse split generally brings with it negative connotations at this end of the market. A look at the price action that has followed the announcement of these two developments, however, suggests markets are taking them as necessary for expansion. The company is holding on to its late Jan/early Feb gains, and hasn’t dipped, as so often this size of company does on this type of announcement.So what's next?Well, when the raise closes, the company will have just shy of $5 million on hand, and can position itself to benefit from an influx of increased client attention on the back of its quality control offerings. 3D printing is only going to grow in popularity (and affordability) and this company is ideally positioned to take advantage of industry growth as and when it comes.We will be updating our subscribers as soon as we know more. For the latest updates on SGLB, sign up below!Disclosure: We have no position in SGLB and have not been compensated for this article.