During a pandemic, investors will naturally assume that medical-related stocks will do well.
After all, the very nature of a pandemic seems to imply that there will be higher demand from people seeking treatment for their symptoms, thus filling hospitals and clinics to the brim.
However, the situation may not be as simple as it sounds.
A quick look at glove-making companies such as Top Glove Corporation Bhd (SGX: BVA) and Riverstone Holdings Limited (SGX: AP4) shows that demand for surgical gloves has shot through the roof.
Companies such as Medtecs International Corporation Ltd (SGX: 546), a manufacturer of reusable hospital apparel and personal protective equipment, saw its net profit soar 1,000-fold from US$41,000 to US$45.7 million in its latest quarter.
The pandemic has greatly increased demand for these peripherals and equipment, resulting in these companies experiencing a sharp surge in revenue and net profits.
Could the same logic apply to the hospitals and clinics business as well?
Let’s dig deeper to find out....