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Is the PPE Theme Ready to Catch Fire? (APT, LAKE, BLGO, MMM)

The COVID-19 pandemic has forced a reimagining of life in the developed world to a far greater extent than most anything since World War II. As we endure this collective battle, there are few subjects that spark populist anger more than personal protection equipment (PPE) and its lack of availability for frontline workers – not to mention the average household.

The most important of this class of object is probably the N95 mask. The importance of these masks is well summarized by the fact that healthcare information sources have gone so far as to attempt to convince Joe Public that they don’t work to protect the wearer from airborne droplets carrying SARS-CoV-2 microbial agents because we need to make sure frontline responders have access to a sufficient supply, and authorities are desperately afraid of hoarding among the general public.

The masks do work, and we don’t have enough of them.

That creates a terrible reality. But it also creates an opportunity for those nasty capitalists among us who understand that they might invest their own savings in companies offering solutions to this whole mess, thereby helping to save the world with abject greed.

Today, we look at four stocks in the thick of this fight for your consideration: Alpha Pro Tech, Ltd. (NYSE: APT), Lakeland Industries, Inc. (NASDAQ: LAKE), BioLargo, Inc. (OTCMKTS: BLGO), and 3M Co (NYSE: MMM)

Alpha Pro Tech, Ltd. (NYSEAMERICAN:APT) was maybe the first obvious publicly-traded play on this PPE theme to get moving and go parabolic.

After a wild spike and lengthy consolidation, APT shares are tracing out a clear near-term bullish ascending triangle pattern with a potential target in the $20-22.50 zone, with accompanying support trailing along the 50-day MA.

Alpha Pro Tech, Ltd. (NYSEAMERICAN:APT) engages in developing, manufacturing, and marketing a line of disposable protective apparel, building supply products, and infection control products in the United States and internationally.

The big idea powering the stock lately is its products of masks capable of helping to prevent the spread of COVID-19.

The company operates through three segments: Building Supply, Disposable Protective Apparel, and Infection Control. The Building Supply segment offers construction weatherization products, such as house wrap, synthetic roof underlayment, and other woven materials.

The Disposable Protective Apparel segment provides shoe covers, bouffant caps, gowns, coveralls, lab coats, hoods, frocks, and other miscellaneous products.

The Infection Control segment offers face masks and eye shields. The company provides its products under the Alpha Pro Tech brand name, as well as under private labels. Its products are used primarily in cleanrooms; industrial safety manufacturing environments; health care facilities, such as hospitals, laboratories, and dental offices; pharmaceutical markets; and building and re-roofing sites.

The company distributes its products through a network of purchasing groups, distributors, and independent sales representatives, as well as through its sales and marketing force.

Alpha Pro Tech, Ltd. (NYSEAMERICAN:APT) managed to rope in revenues totaling $18.2M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 47.5%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($17.6M against $10.5M).

Lakeland Industries, Inc. (NASDAQ:LAKE) shares have a clear history of finding a bid as disease outbreak fears rear up, with the last big spike occurring in 2014 when Ebola came back into the headlines in a scary way. Now, we see a similar dynamic.

The technicals don’t make much of a case here.

Lakeland Industries, Inc. (NASDAQ:LAKE) bills itself as a company that manufactures and sells industrial protective clothing and accessories for the industrial and public protective clothing market worldwide.

It offers limited use/disposable protective clothing, such as coveralls, laboratory coats, shirts, pants, hoods, aprons, sleeves, arm guards, caps, and smocks; high-end chemical protective suits to provide protection from highly concentrated, toxic and/or lethal chemicals, and biological toxins; and firefighting and heat protective apparel to protect against fire, burns, and excessive heat.

The company also provides reusable woven garments, including electrostatic dissipative apparel for electric and gas utilities; flame resistant meta aramid, para aramid, and FR cotton coveralls/pants/jackets used in petrochemical and refining operations; FR fabrics; and cotton and polycotton coveralls, lab coats, pants, and shirts. In addition, it provides high visibility clothing comprising reflective apparel, including vests, T-shirts, sweatshirts, jackets, coats, raingear, jumpsuits, hats, and gloves; and gloves and sleeves that are used in the automotive, glass, and metal fabrication industries.

The company sells its products to a network of approximately 1,600 safety and industrial supply distributors through in-house sales teams, customer service group, and independent sales representatives. It serves end users, such as integrated oil, chemical/petrochemical, automobile, steel, glass, construction, smelting, cleanroom, janitorial, pharmaceutical, and high technology electronics manufacturers, as well as scientific, medical laboratories, and the utilities industry; and federal, state, and local governmental agencies and departments.

The action hasn’t really heated up in the stock, with shares moving net sideways over the past week. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -17%.

Lakeland Industries, Inc. (NASDAQ:LAKE) managed to rope in revenues totaling $28.2M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 12.6%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($14.6M against $12.9M).

BioLargo, Inc. (OTCMKTS:BLGO) is probably the most interesting name on this list right now because the company just announced that a product developed by its subsidiary, Clyra Medical, was tested at the Galveston National Laboratory (GNL) under official oversight and was found to exhibit an extremely high antimicrobial efficacy at 99.999% kill rate (complete inactivation). The product is Clyraguard, which is Iodine-Copper based and protected as IP, and doesn’t hurt masks or human skin or mucus membranes.

In other words, this one product could render this whole PPE access crisis somewhat moot because the equipment can be disinfected while in use without impacting protective efficacy.

BioLargo, Inc. (OTCMKTS:BLGO) focuses on unique disruptive solutions to deliver clean air, clean water and a clean, safe environment (www.biolargo.com). BLGO has a deep and expansive R&D facet, with collaborations that read like a who’s who list of top teams, including UCLA, Shell Co, Suncor, Total, Epcor, NWRI, EREF, and a substantial list of top north American universities in the US and Canada.

The company’s engineering division features experienced professional engineers dedicated to integrity, reliability, and environmental stewardship (www.biolargoengineering.com). Its industrial odor control division, Odor-No-More (www.odornomore.com) features CupriDyne Clean Industrial Odor Eliminator (www.cupridyne.com), which eliminates the odor-causing compounds and VOCs rather than masking them, and is now winning over leading companies in the solid waste handling and wastewater industries and other industries that contend with malodors and VOCs.

BLGO’s subsidiary, BioLargo Water (www.biolargowater.ca), develops the Advanced Oxidation System “AOS,” a disruptive industrial water treatment technology designed to eliminate waterborne pathogens and recalcitrant contaminants with better energy-efficiency and lower operational costs than incumbent technologies.

And its subsidiary, (as noted above) Clyra Medical features effective and gentle solutions for chronic infected wounds to promote infection control and regenerative tissue therapy.

3M Co (NYSE:MMM) shares are holding key support in the $125 area after pulling back from more than twice that from the highs logged in early 2018, with international equity indices. We see $165-170 area as in play on a technical basis.

The early 2018 level was logged as global growth saw its cycle height following fiscal stimulus measures in the US. The COVID-19 bear extended the corrective phase. But the company has started to join the spotlight on PPE production. That said, this is a massive international conglomerate, so PPE is only a small part of the overall equation driving shares.

3M Co (NYSE:MMM) bills itself as a company that develops, manufactures, and markets various products worldwide. It operates through four business segments: Safety & Industrial, Transportation & Electronics, Health Care, and Consumer.

The Safety & Industrial segment offers personal safety products, adhesives and tapes, abrasives, closure and masking systems, electrical markets, automotive aftermarket, and roofing granules.

The Transportation & Electronics provides electronics, such as display materials and systems, electronic materials solutions; automotive, aerospace, and commercial solutions; advanced materials; and transportation safety products. This segment serves transportation and electronic original equipment manufacturer customers.

The Health Care segment offers medical solutions, oral care, separation and purification sciences, health information systems, drug delivery systems, and food safety products.

The Consumer segment provides home improvement, home care, and consumer health care products, as well as stationery and office supplies. This segment is also involved in the retail auto care business. The company serves automotive, electronics and automotive electrification, appliance, paper and printing, packaging, food and beverage, construction, medical clinics and hospitals, pharmaceuticals, dental and orthodontic practitioners, health information systems, food manufacturing and testing, consumer and office retail, office business to business, home improvement, drug and pharmacy retail, and other markets.

The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 5% in that timeframe. Shares of the stock have powered higher over the past month, rallying roughly 5% in that time on strong overall action.

3M Co (NYSE:MMM) pulled in sales of $8.1B in its last reported quarterly financials, representing top-line growth of 2.7%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($4.5B against $9.1B, respectively).

Published by Benjamin Roussey

Benjamin Roussey is from Sacramento, California. He has two master’s degrees and served four years in the U.S. Navy. His bachelor’s degree is from CSUS (1999) where he was on a baseball pitching scholarship. His second master’s degree is an MBA in Global Management from the University of Phoenix (2006). He has worked for small businesses, public agencies, and large corporations. He has lived in Korea and Saudi Arabia where he was an ESL instructor. Benjamin spends his time in between Northern California and Cabo San Lucas, Mexico, committing himself to his craft of freelance and website writing. http://www.facebook.com/ben.rouss

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