Today, I want to share a COVID-19 play that no one is talking about but could offer you impressive upside.
But first let me set the stage for why I think this opportunity is so great.
The Big Problem Facing the COVID-19 Vaccine Rollout
Margaret Keenan, a 90-year-old retired shop clerk from Northern Ireland, received the first Pfizer-made COVID-19 vaccine yesterday. The second patient to receive the vaccine was William Shakespeare of Warwickshire, England.
The importance of these events cannot be understated. They represent the first steps toward a return to more normal ways of life.
The simple takeaway is that Moderna's and Pfizer’s vaccines are coming.
Looking forward, however, the road to normalcy is more complicated than many may realize. Pfizer’s vaccine needs to be kept at -70° Celsius, which requires special storage freezers and shipping containers. This type of equipment is in very short supply.
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Moderna’s vaccine also requires subzero temperatures of -20° Celsius. Although these types of freezers are in better supply, supply chain experts still have concerns about a mass rollout.
Debra Kristensen, a vaccine innovation and supply chains expert at international public health nonprofit PATH with 30 years of experience, notes a mass rollout “is possible, but it's definitely going to be much more expensive and more difficult,” as reported by NPR.
Without proper cold storage, these vaccines quickly lose their effectiveness, rendering them unusable.
But with problems come solutions, and in that way we have an under-the-radar opportunity right in front of us.
Interest in This Cold Storage Play Is Heating up Fast
Carrier Global Corp. (NYSE: CARR) is one of the few publicly traded companies that sells super-cold freezers and refrigeration technology for transportation. The company was spun off from United Technologies during its merger with Raytheon.
Meaning Carrier is no upstart operation.
It has extensive cold supply-chain expertise. Its HVAC and refrigeration segments sell products and solutions directly to clients, including building contractors and owners, transportation companies, and other facilities.
And I expect this company's products to be in huge demand moving into 2021. We’re already seeing a sharp rise in orders for this equipment.
The Commercial Real Estate Development Association reports, “Demand for cold storage space will rise by 100 million square feet during the next five years. That’s an increase of roughly 47% from the current level of 214 million square feet.”
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And in a Financial Times report, Dusty Tenney, CEO of Stirling Ultracold — a cold-storage manufacturer for Pfizer — notes that he has seen orders for his company’s products triple over the past few months.
The first thing I like about Carrier is that it is perfectly positioned to benefit from a massive uptick in demand for its products and services next year.
Another reason I like Carrier as opposed to other companies in this space is it has a relatively cheap price compared with other stocks in the sector. Trane Technologies for example trades at more than three times the price of Carrier, and they both have similar market caps of roughly $33 billion.
Looking deeper into Carrier, I like the fact that it has established a strong upward momentum in its stock since its spinoff from Raytheon in April.
(source: energyandcapital.com)
Moreover, the company is cash flow-positive and has roughly $3.8 million in cash and equivalents as of its last earnings report for the three-month period ending September 30, 2020.
To sum it all up, there are three reasons why this stock has my interest today:
- It’s relatively cheap compared with other options in the sector.
- I like trading into strength, and since its spinoff in April, the trajectory is exactly what I want to see.
- I firmly believe demand for its products could jump two- or threefold in the coming months.
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The bottom line: Carrier Global is my under-the-radar COVID-19 play I think you should seriously consider today.
To your wealth,
Sean McCloskey
Editor, Energy and Capital