Top 3 Healthcare Stocks for COVID-19

I have asked one of my close friends, Desmond*, to give his perspective regarding the potential of healthcare stocks in the Singapore market in the current COVID-19 pandemic. His investing strategy is very much different from mine. I prefer dividend investing where I invest in proven and stable companies for the long term while he's a growth investor who invests in companies that have the potential for high growth (which are healthcare-related companies in the current pandemic). He started investing in healthcare stocks in the Singapore market in June and has made a profit of 20% on his portfolio within 2 months. The purpose of this post is to show a new perspective on a different investing strategy (growth investing) and how it can work for different investors. There are many different types of investors and it doesn't matter which type you are as long as you are able to profit consistently with your investment strategy.

Desmond's Perspective

The onset of the coronavirus 2019, COVID 19, has sent global stocks plummeting. With many nations increasingly placed on lockdown, it is inevitable that their economies will take the greatest hit from such measures. The STI Nikkei Index had fallen drastically to a record low since the global financial crisis in 2009 within a month since the WHO declared COVID 19 a pandemic. To put things into perspective, this was all before circuit breaker/lockdown measures were implemented in Singapore and many of its key trading partners. In the midst of every crisis, lies great opportunity and it will be the personal protective equipment (PPE) manufacturers as well as healthcare industry that stand to capitalize on it. Surging demand and increased average selling price (ASP) of PPE has seen profits of such companies more than doubled in recent times.

1. UG Healthcare Corporation (41A)
UG Healthcare Corporation is an established latex and nitrile examination glove manufacturer with a global distribution network. In our world where outbreaks of diseases are increasing, their products are growing in demand by healthcare professionals. This is evident where there is a surge in demand for their products in this current COVID-19 pandemic. They have 2 manufacturing plants located in Malaysia and companies located in Europe, USA, China, South America, and Africa. Their glove products are used in a wide range of industries including Healthcare, Food and Beverage, and Automotive. UG Healthcare has yet to release financial results since COVID 19 was declared a pandemic in February. As such, it would be difficult to provide a technical analysis of its results due to the virus. Yet, its share price has increased more than 10-fold since its pre-COVID days. This shows the faith investors have in the company and is expected to further rise in the coming days to the release of its financial results in August. This healthcare company share price has the potential to rise significantly in August and is one that growth investors are looking out for.

You can find out more about UG Healthcare Corporation here.

2. Medtec International (546)
Medtec International is a well-known healthcare products and hospital services provider and a leading manufacturer of Personal Protection Equipments (PPE), including protective gowns and specialized cleanroom products. Their healthcare products have received great reviews by international buyers regarding their quality. Moreover, they have donated a large number of PPEs and medical supplies to disadvantaged communities and frontline workers, generating positive publicity. As you can imagine, the demand for their products has soared significantly since the COVID-19 pandemic. They have offices and facilities spanning across Asia - Singapore, Philipines, China, Taiwan, and Cambodia. Originally a penny stock before Covid-19, Medtec has risen to the occasion and has proven to be one of the more resilient healthcare stocks in recent days, surging almost 20 times compared to a year ago. In its recent financial results released for 1Q20, the company saw a whopping 1500% year-on-year increase in net profits. With many analysts expecting a stronger showing in results for 2Q20 in August, it will be one of the stocks to look out for in 2020.

You can find out more about Medtec International here.

3. Riverstone (AP4)

Amongst the top few glove manufacturers in the world, Riverstone is another stock to look out for. Riverstone specializes in the production of cleanroom gloves, fingercots, and packing bags. They have grown to become the leading global supplier for cleanroom gloves. Their products are exported to many countries across the world and they have international sales offices worldwide to facilitate the process. The demand for their healthcare products has increased substantially due to the current COVID-19 pandemic which has caused their share price and net profits to increase as well. Recent expansion plans have allowed the company to increase its production of gloves to more than 10 billion annually. Its net profits surged 54.3% year-on-year in 1Q20, which is partially driven by a reduction in the cost of butadiene, a key raw material for its gloves. This is another exciting healthcare stock to look out for in 2020.

You can find out more about Riverstone here.

With many countries across the world implementing mandatory wearing of masks coupled with the surge in demand of masks in the healthcare industry, it is expected to see many companies involved in the production of such goods to receive record profits and growth. Many of these medical supplies companies are due to release their financial results for 2Q20 in August. The healthcare industry is certainly a good place to look for opportunities for growth investors in the current pandemic.

*Desmond's investing strategy involves looking at the company's Price/Earnings (P/E) ratio and its earnings per share (EPS). He uses the financial results and statements of the companies as a guide for possible opportunities. 

What are some healthcare stocks you are looking out for now?