Hey folks, it's Karen, Head of Data Science at Stock Card. This week I used the COVID-19 Testing Kit and meshed it with one fundamental indicator and two technical indicators using the new Filter function on the Discover page, used to result to come up with stock on my Watchlist. Let me share with you how I went about this screening.
Steps to follow
Visit Stock Card's Discover page, and follow these steps:
If you are a Stock Card user (on our free Starter plan or premium plans), you can see the final results by clicking on this link. It is noteworthy that the results may vary day to day due to price changes in the stocks included in the collection. As of the closing on Friday, September 11, 10 stocks are included in the screening results. Click to view the results, or continue reading.
Using filter results
The overall market has been quite volatile since the indices (e.g., Nasdaq-100, S&P 500) peaked on September 2. In particular, the rally of tech stocks fueled by Softbank has receded, and cautious investors may be inclined to refrain from “buying the dip” in the FAANG and tech stocks resulting in drastic declines in some of Stock Card most popular stocks. What other stocks can investors consider to diversify their portfolios away from the technology sector? Investing in the stocks in the COVID-19 Testing Kit collection could be an excellent way to get exposure to the biotech and healthcare sectors and diversify one’s portfolio.
Let’s take Thermo Fisher Scientific Inc (NYSE: TMO), one of the ten stocks in the filtering results, as an example.
Add to watchlist
The chart below shows that TMO has outperformed the S&P 500 index throughout the year and is very close to the Nasdaq-100 (NDX) Year-to-Date returns daily based on returns. In the most recent pullback since Sept 3, as both S&P 500 and Nasdaq have been laggard, TMO has shown increasing strength, which is reflected in the daily returns. This may qualify TMO as a good addition to your watchlist.
Investing in biotechnology companies that focus on the fight against COVID-19 involves understanding four main components: diagnostics, cure, vaccine, and distribution. More than 100 companies are competing in the vaccine development race, and several others are already getting ready to produce and distribute it. However, to contain the spread, diagnostic testing is an important frontier as the vaccine development is. As always, what becomes a society's priority tends to become a noteworthy investment too. This week, we turn our focus on COVID-19 Testing Kit stocks to give StockCardians and our broader community a starting point for their fight against COVID-19, investing-style.
The overall process of diagnostic testing depends on several different products such as swabs, glass vials, RT-PCR testing machines, a laboratory apparatus most commonly in DNA segmenting via the polymerase chain reaction (PCR), electronic or disposable pipettes, filter tips, and refrigerated microcentrifuges. To those products, one can add services such as test sample transportation and imaging centers. To build a robust list of companies involved in manufacturing testing kits and distribute diagnostic testing, we first referred to Stock Card’s proprietary market database to look for diagnostic testing companies. We then validated the list with holdings of exchange-traded funds such as the GERM ETF, which seeks to track the Prime Treatments, Testing, and Advancements Index.
Because of the priority and popularity of the COVID-19- related topics, almost every pharmaceutical, and healthcare company associate its operations with developing a testing kit, vaccine, or cure. However, the tricky part of the research was to screen for companies that are much more committed to finding the cure, assisting with diagnostics, and producing materials needed for various efforts in the COVID-19 ecosystem and are achieving early success. Our analyst team spent more than two weeks evaluating the list qualitatively, and the result has turned out to be a reliable yet robust list of companies worthy of your attention.
Risk and opportunity
As always, when you invest in companies without a proven track record of product and financial success, it involves risk. The risk is exacerbated when dealing with biotechnology companies in the COVID-19 ecosystem of vaccine and testing kits developments and has no other revenue sources. Your investment success would have two possible extreme outcomes. Either the company succeeds, and you win with it. Or, despite all the efforts and stock price volatility, the investment loses all its value. A binary result is the most typical risk you'd need to be ready to face, should you choose to invest in the COVID-19 testing kit stocks. The evidence of such binary outcome is visible in the rapid decline of the stock prices of testing kit frontrunners such as Quidel, Hologic, and Quest Diagnostics, since the launch of the low-cost testing kit by Abbot.
While that's a substantial risk, it may also mean an opportunity. It is worth evaluating some of the beaten-down testing kits stocks to find well-managed companies that are not purely reliant on a testing kit's success and can recover into more reasonable valuation in the future.
After the thorough research and curation of the list, we identified more than 80 companies involved in producing the COVID-19 testing kits and providing diagnostic testing services. You can access them directly by clicking on the below button. Alternatively, type in "COVID-19 testing kit" in the search bar, and you get the list.