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PPE Market Booming on Coronavirus Fears: 4 Stocks in Focus

Ritujay Ghosh
·6 min read

Personal protective equipment (PPE) has become a must for stepping outside in the coronavirus era to avoid getting contaminated. This has led to a substantial surge in demand for personal protective equipment.

In fact, PPE manufacturing has become one of the most important industries in the United States nearly overnight with at-home orders being relaxed and the economy reopening. This brings to focus some companies that have fast shifted focus to developing and marketing PPE.

PPE Market Poised to Grow

The U.S. economy is opening but the Fed and the Centers for Disease Control and Prevention (CDC) has laid a stringent guideline that requires both public and caregivers to use PPE to minimize chances of COVID-19 infection. Moreover, fears of the virus fail to subside given the growing number of cases being reported from several states. This has made the use of PPE all the more crucial.

According to new data from market research firm Statista, the global PPE market — from masks, gowns and gloves, to shoes and sanitizing gels — is expected to balloon from $52 billion in 2019 to $93 billion in 2027. Products such as surgical gloves and face masks that were previously predominantly in the domain of specialist medical personnel, have become much sought after even by the general public.

According to Allied Market Research, the global disposable gloves market amounted to $6.8 billion in 2019, and is expected to nearly triple to $18.8 billion by 2027. Malaysia is the world's biggest maker of rubber gloves, accounting for around 60% of global exports. Per the Malaysian manufacturers' association MARGMA, worldwide demand is projected to rise from 296 billion in 2019 to 330 billion this year.

PPE Manufacturers Operating at Maximum Capacity

The United States reported more than 6.35 million coronavirus cases as of Sep 9, according to data compiled by John Hopkins University. The economy has partially reopened and government is pushing for a complete reopening but fears continue to grow as there are no signs of the virus subsiding.

Hence as we step out of our home, PPE will be our indispensable companion. The key factors expected to drive the market for the personal protective equipment include stringent regulatory framework, growing awareness about the importance of healthcare safety, increasing focus on safety preparedness at healthcare facilities, and accelerating rate of cases of COVID-19 infection.

Given this scenario, the industry's largest manufacturers are operating at maximum capacity to expand their domestic production capacity within the year.

Stocks to Watch

We have zeroed in on four companies that have been leading from the front in ramping up production and distribution of PPE since the coronavirus outbreak. Each of the stocks carries a Zacks Rank #3 (Hold).

Honeywell International Inc. HON has been working aggressively over the past few months to meet growing demand of personal protective equipment. The company now aims to produce more than 20 million N95 disposable masks monthly. Also, as the economy reopens, Honeywell in an effort to provide a safer, healthier travel experience, has introduced safety packs designed to better protect airline passengers and crew while flying.

Honeywell International’s expected earnings growth rate for the next year is 11.6%. Its shares have gained 7.1% in the past 30 days. The company has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3M Company MMM has been in focus since the coronavirus outbreak. Although the company was somewhat slow in its initial response to the growing demand for respirators in the United States, it has ramped up manufacturing of N-95 masks. 3M Companyhas been constantly working to meet the domestic demand for N-95 masks since President Donald Trump urged it to increase its production capacity.

The company said in July that it would triple its monthly production of N-95 masks after winning a pair of contracts from the U.S. Department of Defense (DOD) worth more than $200 million. Globally, 3M expects to double its annual output of N95 masks to 2 billion.

The company’s expected earnings growth rate for next year is 6.8%. The Zacks Consensus Estimate for current-year earnings has improved 4% over the past 60 days.  The company has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Amazon.com, Inc. AMZN isn’t typically into making PPE but has been using its technological expertise to fight the pandemic. The company recently unveiled a new AI tool to help employees follow social distancing rules. The device called Distant Assistant combines a TV screen, depth sensors and AI-enabled camera to track employees’ movements and give them feedback in real time. When workers come closer than six feet to one another, circles around their feet flash red on the TV, indicating to employees that they should move a safe distance apart. The devices are self-contained, meaning they can be deployed quickly where needed and moved about.

The company’s expected earnings growth rate for the current year is 39.1%. The Zacks Consensus Estimate for current-year earnings has improved 59.4% over the past 60 days. The company carries a Zacks Rank #3.

MSA Safety Inc MSA is engaged in the development, manufacture and supply of safety products that protect people and facility infrastructure. The company's core product lines include self-contained breathing apparatus, fixed gas and flame detection systems, handheld gas detection instruments, industrial and fire service head protection products, and fall protection devices. Earlier this month, the company partnered with Allegheny Health Network (AHN) to procure P100 industrial grade respirators that can be disinfected and reused repeatedly.

The company’s expected earnings growth rate for the next year is 13.4%. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 30 days.  The Zacks Consensus Estimate for current-year earnings has improved 3.8% over the past 60 days. The company carries a Zacks Rank #3.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>


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