8 Dental Stocks If You Want to Clean Up


dental stocks - 8 Dental Stocks If You Want to Clean Up

Source: Shutterstock

Intelligence operatives, colloquially known as spies, often reference the fear of going to the “fingernail factory.” You can imagine why. Some countries take a very dim view on their national security being violated. But if I were involved in the clandestine services, I’d fear arriving at the “dentist’s office.” There’s a fine line between service and torture in this industry. But that shouldn’t deter you from dental stocks to buy.

Prior to the novel coronavirus pandemic – and believe me, I’m going to get to that shortly – the cleaning sector, so to speak, offered a reliable upside pathway. During the old normal, industry experts predicted that the global dental market in 2020 would haul in $35 billion, while the following year would generate $36.8 billion. These were hardly unreasonable estimates given prior tallies, thus supporting the case for dental stocks to buy.

Of course, SARS-CoV-2 had a thing or two to say about this sector and so many others. Naturally, with the exploding crisis and government shutdown orders, many elective medical procedures were put on hold. Further, with dentists and their assistants at great risk due to Covid-19 being a respiratory disease, the pandemic had a detrimental impact on this market segment.

Oral care global market
Source: Chart by Josh Enomoto

Nevertheless, it’s important to realize that dental stocks to buy cover a wide range of products and services. For instance, the size of the global oral care market was projected to be nearly $46 billion before the crisis, potentially reaching $53.3 billion by 2025. Frankly, I don’t imagine that these numbers will change all that much. If anything, they might increase.

How so? With the lockdowns impacting dentists’ offices throughout the world, most people likely realized how important self-sufficiency is regarding their health. Therefore, Covid-19 played a sector evangelism role for the industry, which bolsters these dental stocks.

  • Colgate-Palmolive Company (NYSE:CL)
  • Procter & Gamble (NYSE:PG)
  • Henry Schein (NASDAQ:HSIC)
  • 3M (NYSE:MMM)
  • Dentsply Sirona (NASDAQ:XRAY)
  • CVS Health (NYSE:CVS)
  • Johnson & Johnson (NYSE:JNJ)
  • GlaxoSmithKline (NYSE:GSK)

Because of the highly variable nature of this industry due to the coronavirus, many of these names are not what you call direct plays. That’s on purpose as the dental industry still has some distinct headwinds to overcome. By spreading out the risk across both direct and indirect investments, you’ll likely have a better outcome with these dental stocks to buy.

Colgate-Palmolive Company (CL)

Source: Shutterstock

One of the biggest names among dental stocks to buy is Colgate-Palmolive Company. This descriptor was appropriate well before the pandemic. With the crisis raging to unbelievable levels in many parts of the world, CL stock offers an elementally direct pathway to profitability. Obviously, with another round of shutdowns in place in key economies, there’s never been a more important time for self-care.

Not only that, the fundamentals match the technicals, which is exactly what you want to see with stable investments. On a year-to-date basis, CL stock is up 23%, which is tremendous when you think about it. No, going to the dentist’s office doesn’t rank highly for either patients or dental professionals, especially today. But such an awful dynamic highlights the importance of stocking up on toothpaste and related hygienic accessories.

As if you needed another reason to consider including CL in your list of dental stocks to buy, a Colgate laboratory test demonstrated “that toothpastes containing zinc or stannous and mouthwash formulas with cetylpyridinium chloride (CPC) neutralize the virus that causes COVID-19 by 99.9 percent.” That’s good enough for me.

Procter & Gamble (PG)

A Procter & Gamble (PG) distribution center in Vandalia.
Source: Jonathan Weiss / Shutterstock.com

Among the powerful household goods brands in the global markets, Procter & Gamble is also a worthwhile idea out of the dental stocks to buy. Primarily, this is due to its oral care brands, which include Crest, Oral-B, Scope and Fixodent. As with CL above, PG stock has been a cynical beneficiary of the shutdowns, with consumers laser-focused on personal hygiene products.

Though Procter & Gamble doesn’t quite measure up to Colgate-Palmolive in the technical department (PG stock is up nearly 11% YTD), I do appreciate the former company’s broad household exposure. For instance, when the coronavirus first breached our borders, everybody began rushing for essential goods. Obviously, oral hygiene ranked highly during this panic.

But it’s not just about that. Many folks stocked up on toilet paper despite Covid-19 being a respiratory disease, not an excretory one. Whatever, Procter & Gamble still benefited, thanks to its Charmin brand of TP. As well, the company was the go-to choice for laundry products, baby care and other personal needs which we don’t need to discuss because you have an imagination.

Henry Schein (HSIC)

Source: Leonard Zhukovsky / Shutterstock.com

At the time I’m writing this, Henry Schein shares are barely above parity. We’re talking just under 1% for the year so far, which is not great. Also, holding HSIC stock is a matter of speculating on capital gains as the company doesn’t pay a dividend. That’s not necessarily high on growth investors’ priorities but it does stink when you’re returning less than 1%.

Of course, that’s better than losing money so we should count our blessings. Nevertheless, HSIC stock could bounce back on a societal and economic recovery. It’s probably not one of the dental stocks to buy right now but it’s definitely worth putting on your radar.

As a distributor of dental and medical products, Henry Schein obviously needs some normalization. Fortunately for the beleaguered organization, the Covid-19 vaccine research, development and distribution have truly happened at warp speed. Theoretically, once we achieve herd immunity, the concept of pent-up demand can lift shares higher.

Don’t believe me? As a guest expert on CGTN America, I discussed that people are buying Christmas-related products out of desperation for normalcy. Once it’s safe, these same folks will likely purchase services that are truly meaningful.

3M (MMM)

3M (MMM) logo on top of a corporate building
Source: JPstock / Shutterstock.com

Unlike Henry Schein above, industrial giant 3M is in red ink for the year, at least as of this writing. However, the company pays a dividend, which must be accounted for if you’re going to make holistic return comparisons. The other difference with 3M is that this is one of the companies that’s on the margins of what you might consider dental stocks to buy. So, why bother mentioning MMM stock?

If you’re thinking N95 masks, you’re spot on. And it also means I’m becoming terribly predictable, something that should be my new year’s resolution to change. But taking that aside, I believe this will be a critical factor moving forward.

According to DentistryIQ.com, the pricing for N95s lacked transparency. Then, with the Covid-19 crisis, an explosion in pricing – I’m not going to call it price gouging because otherwise, I’d get trolled by those defending billionaire executives’ honor – caused chaos within the sector.

But if there’s a positive here, it’s that we all learned that production of critical products should never be outsourced. This sentiment shift should benefit MMM stock, which has been slowly rising since this year’s March doldrums.

Dentsply Sirona (XRAY)

Source: Cineberg / Shutterstock.com

For the vast majority of patients, Dentsply Sirona is a brand of comfort. As one of the world’s leading manufacturers of dental equipment and supplies, the company does its best to make sure that what is sometimes an unpleasant experience is as tolerable as possible.

That is unless you’re an intelligence operative captured by unfriendly forces. Then, Dentsply Sirona may be a distinctly unpleasant brand. But that’s a different topic for a different day.

Unfortunately, XRAY stock also found itself in the dentist’s office, if you get my drift. If you don’t, then check out the equity unit’s YTD performance, which is almost 9% in the red. Since around election day, shares were moving higher. But then coronavirus cases started worsening, and not even the promise of mass vaccinations could help direct dental stocks to buy.

Does this mean you should avoid XRAY stock? For the time being, I’d probably end up waiting on the sidelines. With how much this pandemic has spiraled out of control, I’m not sure when people will feel comfortable going back to see their dentists. However, keep it on your watch list because a return to normal could strongly benefit from pent-up demand.

CVS Health (CVS)

the exterior of a CVS pharmacystore
Source: Jonathan Weiss / Shutterstock.com

CVS Health isn’t what you call a direct play on dental stocks to buy. But that doesn’t make it any less relevant to oral hygiene. Indeed, if you find yourself needing whatever common health and wellness product, your local CVS store (many of which are open 24/7) will likely be able to help.

This latter point – accessibility/availability – is a lot more crucial for the narrative of CVS stock than some folks might realize. If you think back to the initial wave of shelter-in-place orders, one of the biggest disruptions to our daily lives was loss of convenient access. Suddenly, retailers that were open all hours or well into the night introduced Covid hours. And that put frontline workers who were working non-traditional schedules into a bind.

Naturally, the importance of this convenience thesis faded until recently. With daily Covid-19 cases surging, resulting in a worrying spike in hospitalizations, many jurisdictions have re-imposed strict lockdown measures. Cynically, this helps CVS stock as it’s an essential investment.

Moreover, I like that CVS isn’t just related to oral hygiene but to a wide range of common needs. Should this crisis worsen in the near term (which is probable), you’ll want to keep tabs on CVS.

Johnson & Johnson (JNJ)

A red Johnson & Johnson (JNJ) sign hangs inside in Moscow, Russia.
Source: Alexander Tolstykh / Shutterstock.com

Throughout this year, Johnson & Johnson has been in the news not as an opportunity among dental stocks to buy but as a Covid-19 vaccine provider. While leaders Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) have dominated headlines, JNJ stock is still relevant in the space because its underlying vaccine is a single-dose approach which doesn’t require frozen storage.

As you know, frozen storage is a bit of a problem regarding the practicality of mass vaccinations. But anyways, that’s a different theme. Here, we’re discussing dental stocks to buy and Johnson & Johnson provides investors with a stable brand that can ride out multiple storms.

First, if we do have that return to normal (or somewhat normal), JNJ stock is primed to benefit. The underlying healthcare giant has a dental professional arm, which sells products like toothbrushes and floss in bulk.

Second, if our trajectory doesn’t lead us to normalcy in an ideal timeframe, then the company offers a full spectrum of oral hygiene products. As we’ve seen with toilet paper runs, common household goods have become top commodities and they could be that way again.

GlaxoSmithKline (GSK)

A GlaxoSmithKline (GSK) office in London.
Source: Willy Barton / Shutterstock.com

Like Johnson & Johnson, GlaxoSmithKline entered the Covid-19 vaccine sweepstakes. Unlike its rival, GSK stock probably isn’t the most viable play on the pandemic. To be fair, one factor that I appreciate is that the company utilizes a more proven subunit approach. However, Novavax (NASDAQ:NVAX) has the clear lead in that department. Still, anything can happen, I suppose.

But the lack of credibility in the coronavirus space may have helped contribute to volatility in GSK stock. Certainly, this is one of the ugliest dental stocks to buy from a YTD perspective. However, shares could enjoy surprising upside due to the underlying company’s Sensodyne brand of toothpaste for people with sensitive teeth.

According to a survey of U.S. dental offices, one-in-eight people have sensitive teeth. Sadly, with the pandemic getting out of control, it’s just not feasible for people to head on over to their local dentist. Sufferers must deal with their pain on their own for a while, which cynically lifts GlaxoSmithKline’s investment profile through increased sales of Sensodyne toothpaste.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

Article printed from InvestorPlace Media, https://investorplace.com/2020/12/8-dental-stocks-to-buy-if-you-want-to-clean-up/.

©2023 InvestorPlace Media, LLC