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PPE Market to Grow on Coronavirus Second Wave: 4 Stocks in Focus

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Personal protective equipment (PPE) has become a prerequisite for stepping out as coronavirus is rearing its ugly head again. Personal protection is a must to avoid getting infected, leading 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. The use of PPE has become all the more important as at-home orders get relaxed and the economy slowly starts to reopen. This brings to focus some companies that have changed gears and are concentrating now on 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 issued stringent guidelines that require both public and caregivers to use PPE to minimize chances of COVID-19 infection. Moreover, with a surge in fresh coronavirus cases in several states, fears of a second wave have started gripping millions. This has made the use of PPE all the more crucial.

According to Reports and Data, the global healthcare personal protective equipment market was valued at $5,018.3 million in 2019 and is expected to reach $8,024.4 million by 2027 at a CAGR of 4.5%.  Gloves, face protection masks or face shield, goggles and mask, gloves, gown or coverall, head cover, and boots are among some of the PPE with soaring global demand.

PPE Demand to Grow on Fears of a Second Wave

The United States reported more than 30,000 new coronavirus cases on Jun 20 and Jun 21, the highest daily total since May 1, according to data compiled by John Hopkins University. Nonetheless, it is unlikely that economy will shut down again.

This makes PPE an indispensable companion outdoors. The key factors to drive the market for personal protective equipment include increasing awareness about the importance of healthcare safety, increasing focus on safety preparedness at healthcare facilities, and an accelerating rate of cases of COVID-19 infection apart from a stringent regulatory framework.

Given this scenario, the industry's largest manufacturers are operating at maximum capacity and are aiming 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). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Honeywell International Inc. (HON - Free Report) has been working aggressively over the past three months to meet the growing demand for personal protective equipment. The company last month announced that it is adding manufacturing capabilities in Phoenix to produce N-95 face masks in support of the U.S. government’s response to the novel coronavirus. It now aims to produce more than 20 million N-95 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 10.5%. Its shares have gained 28.9% in the past three months.

3M Company (MMM - Free Report) 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 ramped up manufacturing of N-95 masks. The company has been constantly working to meet domestic demand for N-95 masks since President Donald Trump urged the company to increase its production capacity.

Last month, the company said that it would triple its monthly production of N-95 masks after winning a pair of contracts from the U.S. Department of Defense 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 10.2%. Its shares have gained 25.5% in the past three months.

Amazon.com, Inc. (AMZN - Free Report) isn’t typically into making PPE but has been using its technological expertise in aiding fight the pandemic. The company 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 to 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 next year is 91.5%. The Zacks Consensus Estimate for current-year earnings has improved 1.6% over the past 30 days.  Its shares have gained 47% in the past three months.

MSA Safety Inc. (MSA - Free Report) is engaged in the development, manufacture and supply of safety products that protect people and facility infrastructures. 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.  Its shares have gained 11.2% in the past three months.

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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