3 Pandemic-Resistant Stocks for Your Watchlist

2020-07-08     thesmartinvestor
3 Pandemic-Resistant Stocks for Your Watchlist

Businesses around the world are facing tremendous stress as countries curb travel, close their borders and shutter their factories.

As such, it’s probably fair to say that few businesses remain unscathed.

These companies may be in industries that are recession-resistant or have natural monopolies that make them more resilient during a downturn.

Given the favourable characteristics, investors should actively seek out such companies as they stand a very strong chance of getting through the pandemic without significant adverse effects.

With that in mind, here are three such pandemic-resistant stocks that investors can consider for their portfolios.

Singapore Exchange Limited (SGX: S68)

Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange operator.

Last month, SGX announced that it will stay open during the COVID-19 circuit breaker period.

Keeping the exchanges open will allow investors and fund managers to continue using its risk management tools and a vast array of derivatives and securities to manage their portfolios.

And with heightened volatility in stock markets around the world, SGX’s suite of products continues to see a surge in demand.

For its securities division, market turnover increased by 124% year on year in March to S$48.2 billion, while securities daily average value (SDAV) jumped 114% year on year.

Total derivatives traded volume rose 41% year on year to 33 million contracts.

With this pandemic unlikely to abate anytime soon, SGX’s securities and derivatives division could continue to see a healthy level of interest.

As more trades are made on its platform, SGX could gain higher revenues, profits and cash flow for the group.

Raffles Medical Group Ltd (SGX: BSL)

Raffles Medical Group Ltd, or RMG, is an integrated healthcare provider. The group owns the flagship Raffles Hospital located in Bugis and a chain of clinics offering private family medicine and health screening services.

Being in the healthcare industry, RMG directly contributes to the fight against COVID-19.

Beyond Singapore, RMG is one of the few pre-qualified private hospital operators in China, underscoring the need for quality medical care in China.

RMG’s new hospital in Chongqing, China has started operations since January 2019 and has been included in China’s social health insurance scheme Yibao.

That said, the virus could delay the opening of RMG’s other hospital in Shanghai.

RMG CEO Dr Loo has mentioned that the completion of the hospital could be postponed to sometime during the third quarter of this year.

The group’s China hospitals will also incur start-up losses during their first three years of operation but for long term investors, it may be well worth the wait.

Top Glove Holdings Berhad (SGX: BVA)

Top Glove is the world’s largest manufacturer of gloves. The group has 2,000 customers worldwide and exports to more than 195 countries.

As of 19 March 2020, Top Glove has 44 factories and a glove production capacity of 73.4 billion pieces per annum.

The pandemic has greatly increased demand for nitrile gloves to be used in the healthcare industry.

As a result, Top Glove’s order book has increased, with strong sales orders coming from Europe and the USA along with the Asian region.

At the moment, Top Glove’s factory utilisation rate is now close to 100%, but the group is expanding its capacity by building three new factories and installing more production lines.

When completed, the new facilities should add an additional capacity of 8.2 billion gloves per annum by end-2020.

Further down the road, another 9.5 billion gloves per annum of new capacity is expected to be available by the end of 2021, bringing Top Glove’s production capacity to a record 91.1 billion.

As demand is likely to remain high for the foreseeable future, Top Glove’s order book should continue to see healthy growth.

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Disclaimer: Royston Yang owns shares in Singapore Exchange Limited and Raffles Medical Group Ltd.

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