There are so many unique facets to how the Coronavirus has affected the economy. Certainly you have the stay @ home trend that leads to more in home entertainment. Or stocking up on food and household essentials. Then you have the work @ home trend with video chat and other collaboration tools seeing a boon.
Now let’s turn our attention to another group of that is seeing a surge in sales because of the unique circumstances. I am referring to all the businesses that help us stay clean. Not like soap and water. But hygienically clean to stave off the spread of the virus.
3 stocks clearly come to mind in this area: Ecolab (ECL), Clorox (CLX) and WW Grainger (GWW). Let’s talk about the merits of each below.
Aanyone who has worked in a restaurant, hospital, or corporate dining room is familiar with ECL. Even though March has not been kind to the ECL share price, it’s likely attributable to so many restaurants being closed. I think this reality just makes ECL a more attractive buying opportunity at this time as we know that they will start to reopen bit by bit over the next few months.
Remember that ECL makes sure that places where people eat are disinfected and clean, and it is being called upon as a trusted resource as virus strategies are formulated by businesses. The firm also works in clean water management with clients ranging from food processors to O & G extraction companies. ECL is uniquely positioned to benefit from the rise of the virus, but gladly has an attractive business model even as those fears fade away. That is why Wall Street analysts still see $192 as the upside target price for shares. That is ample reason to consider ELC today.
CLX is a solid stock that has performed well for decades, and will continue to do so after we are able to move on from the coronavirus. In the meantime, more people are disinfecting their homes than ever before, and sales for Clorox products are surging. In fact, my wife recently couldn’t find Clorox wipes at any of the local stores. So she had to go on EBay to buy a package of 4 for $50 (about 5X the normal price).
Remember that CLX is about more than just bleach. CLX also offers other brands that work well with the stay @ home trend Kingsford Charcoal, Liquid Plumr, Fresh Step kitty litter, and Rainbow Light nutritional supplements, among other well-known household brands. Their portfolio spans a wide range of consumer goods, making CLX a solid bet. With a long history of year over year growth on top of a healthy 2.5% dividend yield makes CLX an attractive choice at any time…but most certainly now.
WW Grainger Inc. (GWW)
There’s no doubt in anyone’s mind that after this is all behind us, maintaining a high level of cleanliness will become more important for all businesses. That’s why I like the supply company, GWW. That’s because the GWW provides supplies to long term care facilities and hospitals, and also works closely with organizations like FEMA and the Red Cross during times of disaster recovery. As you certainly understand the demand from those organizations is already greatly on the rise as hospital utilization soars. I see their products very much in demand in the coming days and months as the country works to clean up this mess caused by the coronavirus.
This one is a tad higher risk…but potentially higher reward. That’s because GWW has many businesses outside the realm that benefits from the coronavirus. Yet, they have just enough that benefits from the trend to make it an interesting selection today. Note that just 8 days ago the analyst from Oppenheimer reiterated his Buy with $355 target for GWW. That upside is what makes shares so attractive at this time.
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ECL shares were trading at $151.27 per share on Tuesday afternoon, up $26.05 (+20.80%). Year-to-date, ECL has declined -21.41%, versus a -25.50% rise in the benchmark S&P 500 index during the same period.
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