Friday Four Play: The “Fear Inoculum” Edition
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The Wuhan coronavirus is officially a global health emergency. The World Health Organization (WHO) says so, so it must be true.
I know what you’re thinking: “I’m so sick and tired of hearing about ‘the coronavirus this’ and ‘the coronavirus that.’”
If you really want to read about Amazon.com Inc.’s (Nasdaq: AMZN) impressive earnings (click here) or Caterpillar Inc.’s (NYSE: CAT) weak guidance (click here), I provided links to useful commentary.
Honestly, dear readers, I wanted to avoid talking about the outbreak today too. But we’ve reached a level of market fear that I can’t, in good conscience, just ignore.
With the global number of infections soaring toward 10,000 and more than 200 dead, I’d be doing you a disservice if I didn’t address the coronavirus issue.
But this won’t be a doom-and-gloom commentary, no sir. I’m just as tired of the fearmongering as you are. Today, we take the power back!
Today, we leave fear behind. We say to the doom-and-gloom financial media: “Get behind me, Satan!” (Or something like that. I’m not sure they really care, but you get the point.)
Today, I give you not one, not two or three … but four actionable trading ideas to profit from the financial media’s viral obsession.
So, without further ado (there’s just too much “ado” sometimes, isn’t there?), here are four companies that could inoculate your portfolio against the Wuhan coronavirus outbreak.
No. 1: Momma’s Got the Magic of Clorox
Prevention. Prevention. Prevention.
It’s the single best way to not catch the coronavirus. (Well, aside from not traveling to China right now, that is.) Your momma always told you to wash your hands and clean up, right? Momma’s got the magic, after all.
But you don’t want just any old cleaner or spray — you want something that kills literally everything it touches. Enter Clorox Co. (NYSE: CLX).
From bleach to wipes to disinfectant spray, Clorox has all your viral prevention needs covered. What’s more, Clorox wipes and spray even say right on the packaging that they kill human coronaviruses.
Surely it can’t be this easy? It is … and don’t call me Shirley!
During the H1N1 (swine flu) virus outbreak in 2009, Clorox stock rallied more than 10% as consumers snapped up the company’s wipes and sprays to help keep themselves safe. With the Wuhan coronavirus even more of a threat than H1N1, it’s time to stock up on Clorox.
Now, there’s a caveat to diving into CLX right now. Clorox is slated to report earnings next Tuesday. Analysts expect earnings to fall 6.4% to $1.31 per share on revenue of $1.43 billion.
If you’re worried about the earnings reaction, waiting until after the report is OK. You’ve got time. The current outbreak isn’t going away anytime soon, unfortunately. What’s more, you might even get a better price on CLX shares if Wall Street overreacts.
No. 2: Alpha Investing
If an ounce of prevention is good, then a whole wardrobe of prevention is even better.
Alpha Pro Tech Ltd. (NYSE: APT) specializes in disposable protective apparel and infection control. Those products include shoe covers, bouffant caps, gowns, coveralls, lab coats, hoods, frocks, face masks and eye shields.
Wait, wait … protective frocks? Those are a thing?
Yes, even protective frocks. Gotta protect your clergy, after all.
As you can see, Alpha Pro Tech is literally designed to profit from outbreaks like the coronavirus — and the prevention of its spread. (Though it’s a bit like cramming toothpaste back in the tube at this point.)
APT shares have seen little action in the past year. But they spiked following the Ebola outbreak in 2014, and they rallied again during the H1N1 outbreak in 2009, soaring more than 600%!
Those incidents proved to be short-lived gains for Alpha Pro … but so too were the respective outbreaks. The coronavirus pandemic will be around quite a bit longer, so the company should bring in more revenue than before … and APT shares will have more time to gain.
Alpha Pro shares are already up nearly 50% since the Wuhan outbreak, but given how the stock surged during the H1N1 situation, there should be plenty of upside left.
No. 3: Ask Abby
Now that we have prevention out of the way, it’s time to start working on containment … and AbbVie Inc. (NYSE: ABBV) already has a head start.
The biotechnology giant’s HIV treatment, Aluvia, is key to that containment. AbbVie has already donated more than $1 million worth of Aluvia to China to help stop the coronavirus from spreading. Aluvia works by limiting key proteins in the human body, which coronaviruses need to replicate and spread.
It appears to be working. Reports state that a man named Wang Guangfa — a respiratory expert at Peking University First Hospital in Beijing — was given Aluvia to fight the virus after he contracted it while helping patients in Wuhan. Wang told China News Week that the treatment worked for him.
As Aluvia is increasingly used to help stop the spread of the Wuhan virus, AbbVie should benefit.
Taking a closer look at the company in general, ABBV stock has struggled this year, following news that the company is buying Allergan PLC (NYSE: AGN) for $63 billion. That’s not chump change, but AbbVie sees opportunity in the massive Botox market (Allergan’s cash cow).
Once Wall Street comes around on the buyout, ABBV should be a solid investment choice even when the coronavirus hysteria passes.
No. 4: Investors Don’t Cry
Prevention? Check. Containment? Check.
All that’s left is finding the cure. No, not The Cure. A cure … never mind.
That honor could fall to Inovio Pharmaceuticals Inc. (Nasdaq: INO).
Last week, the Coalition for Epidemic Preparedness Innovations (CEPI) awarded Inovio with a $9 million grant to develop a Wuhan virus vaccine. This is the second time CEPI has doled out cash to Inovio.
The company was awarded $56 million to develop vaccines for Lassa fever and Middle East respiratory syndrome (MERS), which is also a coronavirus. Inovio has also developed a vaccine candidate for Zika.
Now, I’ll be straight with you. Investing in Inovio might appear to be only a short-term prospect. Outside of virus outbreaks, Inovio shares don’t move a whole lot. That said, the company has become the go-to biotech firm to develop coronavirus vaccines — as shown by its work with MERS.
The continued resurgence of coronaviruses has to be addressed at some point by the global health community. That’s where Inovio will step in. It’s got experience working with these viruses and the cash to push forward with that experience. And we all know the big pharmaceutical companies aren’t going to step in every time there’s a specialized outbreak.
Looking at INO stock, the shares received a healthy boost following the CEPI news but have since retraced most of those gains. But Wall Street is rather shortsighted on Inovio. This will play out in your favor, as the recent weakness offers an excellent entry point.
Great Stuff: No Fear, in the Clear
That’s four ways you’re better prepared for market troubles than your Corona-clinking friends. As Great Stuff always says, forget the panic fest when there’s a chance to invest.
Mr. Great Stuff, I’ve never heard you say that before…
Technically, you’ve never heard me say anything in this text-based venture! But what I do always tell you is to find your guide — someone to travel these investing waters with you.
Now, most of you know Paul for his cutting-edge tech trends … but there’s more to the man than that! What many readers don’t know about is Paul’s incredible experience in biotech.
From medical technology to blockbuster drugmakers, Paul has spotted it all. And Paul’s readers have made thousands, even hundreds of thousands of dollars, by following his recommendations.
And today, Paul’s revealing the trading strategy that helped grow his personal account 305% in one year.
You can watch the full video by clicking HERE. Or, if you’re not one for videos, you can read all about it by clicking HERE.
That’s all for this week. But don’t fret, you can get more meme-y market goodness by following us on Facebook, Twitter and Instagram!
Until next time, good trading!
Great Stuff Managing Editor, Banyan Hill Publishing