The course of the coronavirus from China cannot easily be predicted from a scientific standpoint, but as an investor there are opportunities to take a position in previously under-the-radar companies. Lakeland Industries (NASDAQ:LAKE) stock is among those opportunities as a so-called “coronavirus stock” worth looking into.
This manufacturer of protective clothing isn’t a typical coronavirus investment, however. Lakeland’s niche is clothing for workers in high-risk sectors, including medical and public health professionals who are exposed to patients that might be carrying the coronavirus.
I’ll concede that niche stocks involve risks. But I believe these are risks worth considering in the case of Lakeland Industries stock.
Lakeland’s Strong Financials
What really appeals to me about Lakeland — and what convinces me that it’s not just another “virus stock” — is that the company was doing well before Covid-19 became a global news item. That’s important to me because I don’t see a company whose revenues are entirely dependent on viral outbreaks as a viable long-term investment.
The last quarterly earnings report confirmed that Lakeland was already thriving. Posting approximately $27 million in sales, the company exceeded quarterly revenue expectations by 7.2%. Moreover, the company reported 14 cents per diluted share in earnings. That more than doubled the results of 6 cents per share posted in the same period a year prior.
Also during the third fiscal quarter, Lakeland had a strong cash position of $9.5 million, representing a 4% year-over-year improvement. On top of all that, the company’s earnings before interest, taxes, depreciation and amortization (EBITDA) increased significantly to $1.9 million.
Lakeland CEO Christopher Ryan had every right to tout his company’s fiscal achievements in light of an outstanding quarter:
“We are delivering orders on time, managing our inventories better and generating other sustainable improvements. … Revenues have increased year-over-year, bookings are up on the year and sequentially, and our backlog has continued to rise, going from $5.4 million at the end of first quarter to $5.9 million at the end of the second quarter to $8.4 million at the end of the third quarter.”
The Right Company for a Crisis
Even with such solid fundamentals, few analysts paid much attention to Lakeland Industries until recently. Investors might tend to focus their attention on makers of face masks. But workers in high-risk sectors have special protective needs, too. Lakeland is ideally positioned to meet their demand.
The company already has international reach, which gives Lakeland a huge advantage as Covid-19 is potentially global in scope. Currently, Lakeland sells its products to numerous countries including India, Canada, Russia and Kazakhstan — more than 50 countries in all.
The lineup of product offerings includes sterile full-body outfits as well as hoods, frocks and boot covers. Perhaps most pertinent to the current crisis is Lakeland’s array of highly protective CleanMax gear, which it advertises as being resistant to viral penetration, blood-borne pathogens and body-fluid penetration.
All that said, I recommend getting to know Lakeland’s variety of hazard-protection gear before taking a stake in the stock. You really need to see what the company has to offer in order to fully appreciate how prepared Lakeland is for the worsening outbreak.
My Final Word on Lakeland Industries Stock
Workers in hazardous career fields deserve protection as much as anyone. I’m glad that Lakeland Industries is prepared for increased demand for protective gear. With this in mind, I’m proudly assigning the stock an A rating. Lakeland was financially stable before the outbreak and should continue to thrive afterwards.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.