Investors in Lakeland Industries (NASDAQ:LAKE), Alpha Pro Tech (NYSEMKT:APT), and Vir Biotechnology (NASDAQ:VIR) are experiencing a wild end to the trading week. Shares of these companies rose as much as 40%, 65%, and 20%, respectively, in early-morning trading on Friday. However, all three of them have since reversed course and have come crashing back down to earth. At their lowest points, they were down 13%, 34%, and 36%, respectively.
As of 2:57 p.m. EST, shares of Lakeland Industries up about 1% while shares of Alpha Pro Tech and Vir Biotechnology were down 9% and 30%, respectively.
You're probably aware that fears of the spread of the COVID-19 (the illness caused by a novel coronavirus) are wreaking havoc on the public market this week. The Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite have all dropped more than 10% from their recent highs in the last five days. That's a remarkably big move in such a short period of time.
At the same time, traders have been going crazy for any stock that is poised to benefit from the coronavirus. Lakeland Industries, Vir Biotechnology, and Alpha Pro Tech have all been identified as "Coronavirus stocks" this week and have gone parabolic in response.
Lakeland Industries, which sells industrial protective clothing such as coveralls and laboratory coats, has surged 47% in the last five days. The only news out of the company during that time is that is participating in an upcoming investor conference. Traders are probably bidding up shares on the hope that demand for its products has surged in the last few weeks.
Vir Biotechnology, which is a clinical-stage immunology company, is up 158% in the last week. A lot of the sudden bullishness is traceable to the announcement that it has partnered with a Chinese drug maker to develop a potential treatment for Coronavirus.
Alpha Pro Tech's returns top them all. Like Lakeland Industries, Alpha Pro Tech sells protective apparel such as gowns, coveralls, face masks, and more. Shares of this normally sleepy stock are up an incredible 317% in the last five trading days, which is a remarkable move. Management announced yesterday that has booked $14 million in orders for its N-95 Face mask, which is a sizable order for the small-cap.
It's impossible for investors to know what the fallout from the coronavirus will be and how that will impact the markets. However, it's likely that stock prices are going to remain extremely volatile as long as the coronavirus continues to dominate the headlines.
It might seem tempting to buy into stocks that could see a short-term benefit from the continued spread of the coronavirus disease, but that is probably unwise in the long term given that the virus will eventually be contained.
Personally, I had no interest in any of these companies prior to their recent jump, and I see no reason to be bullish on them today. That's why my plan remains to focus my time and capital on companies that are poised to grow rapidly even if it takes a long time for governments to get the coronavirus under control.