4 PPE Stocks Set to Rally as Coronavirus Cases Increase

NYSE: HON | Honeywell International Inc.  News, Ratings, and Charts

HON – Personal Protective Equipment (PPE) companies such as Honeywell (HON), 3M (MMM), Lakeland (LAKE) and MSA Safety (MSA) are likely to see increased sales in the weeks and months ahead as coronavirus cases rise.

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Unfortunately, there is a new spike of coronavirus cases in the U.S.  It’s being driven by worsening outbreaks across the South and Southwest, including in Arizona, Texas, Florida, North Carolina and South Carolina.

This means Personal Protective Equipment (PPE) companies such as Honeywell (HON), 3M (MMM), Lakeland (LAKE) and MSA Safety (MSA) are likely to see increased sales in the weeks and months ahead.

Honeywell (HON)

On the surface, it appears as though HON has nothing to do with combating COVID-19. However, this manufacturing business is one of the top producers of N95 masks. The majority of HON’s revenue stems from the space industry yet its increased production of N95 masks, along with other protective gear, could help push its stock higher.

The POWR Ratings have HON ranked 9th of 38 businesses in the Industrial – Manufacturing space. HON’s price return in 2019 was 36.70%. With an average analyst price target of $155.38, there is plenty of room for HON to move upward as a second wave of the virus looms.

3M (MMM)

Aside from social distancing, the single most important thing people can do to prevent the spread of the coronavirus is wear masks.  MMM is one of the world’s largest manufacturers of protective N95 masks, that medical professionals use, and now the general public wear to protect themselves from Covid-19.

MMM has tripled its monthly N95 mask production following a couple contracts with the United States Department of Defense worth in excess of $200 million. The company will double its yearly output of these protective masks to more than two billion. MMM’s anticipated earnings growth rate for the upcoming year is slightly above 10%.

The POWR Ratings have MMM rated as a Buy with B’s in every POWR Component category. The stock is ranked 7th of 59 companies in the Industrial – Machinery category. Though MMM has negative price returns in the past six-month, one-year and three-year time periods, it has a 21% price return across the past three months and a 7.76% price return in the past month.

The average analyst price target for the stock is $168.50, meaning it has 7.41% upside. Furthermore, MMM’s forward P/E ratio is under 20 so it has solid value.

Lakeland (LAKE)

Doctors, nurses, emergency response workers and others need safety garments along with protective accessories to avoid contracting the virus while helping others. LAKE makes these garments and accessories. Examples of LAKE products include chemical protective suits, disposable protective clothing and face masks. 

The POWR Ratings have LAKE rated as a Buy with an A Trade Grade and an A Peer Grade. The stock is ranked 32nd of 132 stocks in the Medical – Devices & Equipment space. LAKE’s price returns are in the green going all the way back to 2018. In fact, the company’s five-year price return is 78%.

The analysts have set a price target of $28.33 for LAKE, meaning it has 36% upside. It is particularly interesting that LAKE has a forward P/E ratio of 8.88, meaning it is likely undervalued at its current price of $20 and change.

MSA Safety (MSA)

What does a company that makes gas/flame detection systems, fire service protection products and gas detection instruments have to do with combating the coronavirus? 

MSA has allied with Allegheny Health Network (AHN) to make P100 industrial grade respirators. These respirators can be disinfected and subsequently reused.

MSA has an anticipated growth rate of 13.4% for the upcoming year. The POWR Ratings have MSA ranked #22 of 65 Air/Defense Services stocks. MSA’s price returns are in the green going all the way back to 2015. Furthermore, the top analysts have set a price target of $123.50 for the stock, meaning it has at least 15% upside.

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HON shares were unchanged in after-hours trading Tuesday. Year-to-date, HON has declined -17.11%, versus a -2.48% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...

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