The only reason to trade coronavirus stocks is for the explosive moves they can make. If a penny stock doesn’t have triple-digit or 10-bagger potential, there’s no reason to really be owning them. We at Insider Financial understand this and we spend our time hunting for COVID-19 stocks that can make big moves. Alpha Pro Tech Ltd (NYSEAMERICAN:APT) is one such stock has taken the market by storm this year.
Alpha Pro Tech was one of the first coronavirus plays to make a big this year. For the longest time, APT stock traded around the $3 level until the market discovered that Alpha Pro Tech makes some of the best masks you can buy to protect yourself against the COVID-19 pandemic. After holding above the $10 support level, APT stock looks to be setting up for another move higher.
About Alpha Pro Tech Ltd
Alpha Pro Tech, Ltd. is the parent company of Alpha Pro Tech, Inc. and Alpha ProTech Engineered Products, Inc. Alpha Pro Tech, Inc. develops, manufactures and markets innovative disposable and limited-use protective apparel products for the industrial, clean room, medical and dental markets. Alpha ProTech Engineered Products, Inc. manufactures and markets a line of construction weatherization products, including building wrap and roof underlayment. The Company has manufacturing facilities in Salt Lake City, Utah; Nogales, Arizona; Valdosta, Georgia; and a joint venture in India.
Alpa Pro Tech Significant Order Growth
Last month, Alpha Pro Tech booked approximately $36.7 million in orders for the company’s proprietary N-95 Particulate Respirator face mask since January 27, 2020, an increase of $14.1 million, or 62%, from the $22.6 million in orders reported as of March 11, 2020, and the company continues to experience greater demand. APT said that it saw exponential increases not only in near-term demand, but also in longer-term ongoing purchase orders that have request dates that extend beyond the third quarter of 2020 and into the first half of 2021.
As a result of a ramp up in production, the company fulfilled approximately $3.7 million of the orders in the first quarter of 2020, which was slightly below the previously estimated forecast of $4.0 million, primarily as a result of delays at the company’s manufacturing facility in Utah following an earthquake in March. The remaining backlog of N-95 face mask orders that are not requested before the beginning of the fourth quarter of 2020 is expected to be fulfilled by the end of the third quarter of 2020. The company still expects its phase 1 ramp up plan on N-95 face mask production to be completed by early May and is in the process of a phase 2 expansion that will involve building additional N-95 face mask production lines to further increase capacity. The phase 2 expansion is expected to be operational by late summer 2020.
APT also experienced a significant increase in orders of the company’s face shield products since January 27, 2020, with current orders totaling over $11.6 million, up from the $1.6 million in orders reported as of March 11, 2020. The approximate average annual sales of this product line over the last three years has been $1.6 million. As with the N-95 face mask orders described above, the company has booked face shield orders that have request dates that extend beyond the third quarter of 2020 and into the first half of 2021. Approximately 24% of the booked orders fall into this category. Approximately $1.4 million of face shield orders were fulfilled in the first quarter of 2020. The remaining backlog of face shield orders that are not requested before the beginning of the fourth quarter of 2020 is expected to be fulfilled by the end of the third quarter or early in the fourth quarter of 2020.
We believe that with lockdowns easing and people returning to work and venturing out, the demand for masks will only increase. Employers will be required to have masks for all employees. Instead of being at home, hundreds of millions of people will be returning to work and going about their lives. Furthermore, there is the expectation that COVID-19 will return again in the fall. Wearing masks will be part of our lives until a vaccine is commercialized. Airlines will require all passengers and crew to wear masks for the duration of flights. Bottom line is that mask are the new fashion accessory whether we like it or not.
Currently trading with a market cap of just $191 million, Alpha Pro Tech is one of the best COVID-19 plays for investors right now for a number of reasons. One, it’s masks are top-shelf and in high demand. Two, the stock is not a speculative play on a vaccine or cure. This eliminates the worries over a SEC trading suspension. Lastly, 40% of the float is short. It won’t take much for a short squeeze to drive the price higher.
Good luck to all (except the shorts)!
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Disclosure: We have NO position in NYSEAMERICAN:APT and have NOT been compensated for this article.