As President Joe Biden embarks on his first full day in office, he has a long to-do list. One of those pressing items is invoking the Defense Production Act as part of a new national Covid-19 response. Beyond sparking hope for a quicker end to the pandemic, such a move carries real potential for a handful of equities. So what do you need to know now? And what are these winning Biden stocks?
It is not clear when or how Biden will use the Defense Production Act, a means of mobilizing companies and ramping up production. However, his Covid-19 supply coordinator Tim Manning has identified 12 areas of supply that are struggling. These include isolation gowns, globes, test swabs and the infamous n95 masks.
Additionally, we know that Biden is signing a host of other executive orders to address Covid-19. Previously, much of the national response left power with the states. Now, Biden wants to centralize the strategy and use federal resources, such as through having FEMA and the National Guard build coronavirus testing clinics. He will also implement new mask mandates for planes and buses, and encourage new clinical studies to identify treatments.
Biden Stocks: All About the Mask Makers
When Biden invokes the Defense Production Act, some of the clearest winners are the companies that make personal protective equipment. That should not be surprising, especially if you reflect back on the earliest days of the pandemic. Hospitals, states and entire nations were scrambling to order enough PPE. These shortages still persist today. No wonder then that Manning has identified PPE products like n95 masks and isolations gowns as top priorities.
Invoking the DPA could help get healthcare and other frontline workers the protection they need. Eventually, it could also mean that everyday Americans have access to higher-quality protective equipment.
So who are the winners here? Six companies come to mind. Leading names like 3M (NYSE:MMM) and Honeywell (NYSE:HON) drove interest back in March, and with their manufacturing lines of ventilators and face masks, are obvious companies to watch here. Lesser-known plays like Alpha Pro Tech (NYSEMKT:APT), Lakeland Industries (NASDAQ:LAKE), Owens & Minor (NYSE:OMI) and MSA Safety (NYSE:MSA) should also be on your radar.
Be cautious as you dive in. Quick investors made a lot of money on these PPE names, but they also display quite a bit of volatility. APT has a 52-week range between $4 and $42. After shooting higher earlier in 2020, shares trade hands for just $13. There is no denying it is a good fit on this list of Biden stocks, but Alpha Pro Tech and its peers may not be perfect for long-term investors.
Test Kit Stocks
Another area to watch today for Biden stocks is the realm of test kits.
Although the end goal with the reopening plan is mass vaccination, public health experts believe we need to ramp up and greatly improve our testing infrastructure. They are betting that we need to test more people, and that we need to deliver results faster. They also are calling for more accurate tests, and ones that are more accessible and more convenient.
Biden hears those calls, and his executive orders this week reflect that. Plus, part of his $1.9 trillion stimulus proposal calls for increasing national funding for testing. With that in mind, some of the leading test kit makers are interesting plays here.
Biden Stocks: Pharma Names
There are two ways to play the pharmaceutical space without touching vaccines. If you want to benefit from the Defense Production Act, one possible winner is Eastman Kodak (NYSE:KODK). Yes, high-flying and controversial KODK stock. The legacy camera company has been struggling, and President Donald Trump made moves that gave shares new life. Essentially, he announced that the company would receive a federal loan to retool its factories to produce generic pharmaceuticals. On the product list was hydroxychloroquine, a generic medication Trump touted as a Covid-19 treatment.
However, KODK stock has not had an easy time in the stock market. After initially rocketing higher, allegations of insider trading rocked shares. Although an investigation has settled those concerns for now, adding Eastman Kodak to your watch list is not a risk-free endeavor.
The second approach here is to look for the companies that will benefit from his increased interest in clinical trials. While it is hard to say exactly what companies could deliver new antiviral or antibody therapies, there is reason to believe Biden will bring more attention to existing products. With this in mind, Gilead Sciences (NASDAQ:GILD), Regeneron (NASDAQ:REGN) and Eli Lilly (NYSE:LLY) are all stocks to watch.
Vaccines, vaccines, vaccines. As we wrote yesterday, Biden is also tackling many challenges around mass vaccination during his first few days in office. His strategy includes centralizing the vaccine strategy, enlisting the help of the National Guard and retiring the existing Operation Warp Speed model. Working with Dr. Anthony Fauci and other health leaders, he has promised to vaccinate 100 million Americans in 100 days. He will need logistics and transportation companies to make that happen.
Right now, vaccines from Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) have authorization in the United States. In order to distribute them, logistics companies must take them from warehouses to the various states. Although there have been plenty of issues, including failing to keep doses at necessary temperatures, this distribution plan is critical to mass vaccination. As Biden ups attention on vaccination, that means names like Cardinal Health (NYSE:CAH) and McKesson (NYSE:MCK) are in the spotlight.
Also, while not a pure play on the space, Amazon (NASDAQ:AMZN) does come to mind. As the Big Tech firm works to court Biden, it has offered its help in the vaccine rollout. If CEO Jeff Bezos can dominate e-commerce, cloud computing, electric vehicles and grocery stores, there is plenty of reason to bet that he can dominate in vaccination.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.