Investors are currently keeping a close watch on two sets of stocks, COVID-19 vaccine developers and drug/therapy makers. There is a possibility that many of these stocks might score big over the next few months depending on their respective R&D progress. However, the rapid gene mutation of SARS-CoV-2 is thwarting all efforts toward determining a confirmed timeline of the vaccine and therapeutic advancements. Also, delivering a successful COVID-19 vaccine in a short span comes with its own share of risks.
Here we may take the example of AstraZeneca’s AZN sudden temporary halt of phase 3 clinical trial of its vaccine candidate earlier this month on certain safety issues. Although the research work was resumed soon after that, this kind of uncertainty increases risks for investors.
Going by Jim Cramer, there will finally be only three or four actual winners. According to him, “Rather than chasing the Covid-19 vaccine developers that are panning for gold, I want to go with the equipment suppliers that sell the medical equivalent of pans and picks and shovels to the gold miners.”
This is highly prudent in a way that these laboratory equipment suppliers’ fate does not depend on the R&D outcomes of the drug and vaccine makers. Let us delve deeper.
Medical Plastic Market the Next Big Thing
Currently, thousands of biotech companies, both small and big, working toward development and manufacturing of therapies and vaccines globally, are resorting to lab plastic consumables suppliers and manufacturers to check on the contagion spread within their laboratories. This has created a rapid increase in demand for products like pipette and automation tips, storage tubes and plates, transfer pipettes, and packaging vials and bottles as well as PCR plates and RNA extraction kit. Every step of COVID-19 research has enormously increased the demand for these lab plastic equipment products.
Recent data states that since the beginning of the pandemic, this market has grown exponentially on solid demand from Original Equipment manufacturers (OEMs) and medical equipment manufacturers for the production of critical care devices including ventilators, thermal scanners, and respirators.
Going by a markets and markets report, amid the pandemic, global medical plastics market size is projected to grow from $25.1 billion in 2020 to $29.4 billion by 2021, at a CAGR of 17.2%.
Demand for medical disposables, part of medical plastic, which include masks, gloves, PPE, face shield etc are growing too with their increasing usefulness in checking the spread of infection.
3 Stocks With Strong Medical Equipment Arms
Here we have discussed three picks depending on their significant stride as medical equipment manufacturers and suppliers amid the pandemic. These stocks sport a Zacks Rank #1 (Strong Buy) or #2 (Buy) and have outperformed their respective industry.
Thermo Fisher Scientific TMO: The company recently invested as much as $140 million to further expand its laboratory plastics consumables production to support significant global demand for COVID-19 testing, as well as development and manufacturing of therapies and vaccines. From bottles, beakers, funnels and tubes to pipettes, tips and diagnostic plates, Thermo Fisher consumables support critical COVID-19 work globally. Its offerings include sample collection vials for diagnostic test kits, pipettes for test processing, lab essentials for research into therapies and vaccines, lab plastics to support clinical and epidemiological studies, and materials for vaccine production and biobanking.
This Zacks Rank #2 stock has outperformed the industry over the past six months, The stock has gained 50.3% in this period compared with the industry’s 32.9% growth. The stock’s long-term expected earnings growth rate is pegged at 15.5%.
Danaher Corporation DHR: The company’s life science businesses, which work on lab equipment, is currently expanding production capacity to support the fight against COVID-19. Also, the recent surge in COVID-19 related research and development among the company’s biotech and pharmaceutical customers is generating strong demand for its bioprocessing, genomic and automation solutions.
This Zacks Rank #2 stock has outperformed the industry over the past six months. It has gained 49% in this period compared with the industry’s 18.3% growth. The stock’s long-term expected earnings growth rate is pegged at 11.6% at present.
Agilent Technologies, Inc. A: This Zacks Rank #2 stock too is expanding in the medical equipment space through its momentous Life Sciences & Applied Markets segment growth. The company’s research equipment Bravo has been rapidly accepted for COVID-19 research. Bravo automates the process of transferring liquids from one container to another. While a person can only transfer one or a few liquid samples at a time, Bravo does 96 samples at once. Here comes the need for increased consumables. The Bravo instrument utilizes 96-well reservoir microplates designed and manufactured specifically by Agilent for automated liquid handlers. Many pharmaceutical companies are already using these microplates.
This stock too has outperformed the industry over the past six months. It has gained 36.9% in this period compared with the industry’s 36.7% growth. The stock’s long-term expected earnings growth rate is pegged at 10%.
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Click to get this free report AstraZeneca PLC (AZN) : Free Stock Analysis Report Danaher Corporation (DHR) : Free Stock Analysis Report Agilent Technologies, Inc. (A) : Free Stock Analysis Report Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research