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Which Stocks Could Win if the U.S. Requires COVID Tests for Domestic Flights?

By Keith Speights and Brian Orelli, PhD - Feb 20, 2021 at 11:05AM

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It's possible that some stocks could fly higher with the policy change being considered by the Biden administration.

The Biden administration has opened the door to potentially requiring passengers on domestic flights to test negative for COVID-19 before boarding. While this policy change might not be made, it could create opportunities for coronavirus test companies if it is put into effect. In this Motley Fool Live video, recorded on Feb. 10, Motley Fool contributors Keith Speights and Brian Orelli discuss some of the stocks that could win if the new policy is implemented.

Keith Speights: Another story that's come out this week is that the U.S. government is considering making it mandatory for all travelers who board domestic flights to have negative coronavirus tests. This requirement's already in place, by the way, for international flights, but the Biden administration is taking a hard look at expanding that requirement to domestic flights. Brian, from an investing standpoint, are there any stocks that could benefit if this policy is implemented?

Brian Orelli: Yeah. We're scheduled to go on a cruise in July. We just got notice that we're going to have to take a coronavirus test to get on the boat in July, assuming they're actually cruising in July. There was 811 million domestic flight passengers in 2019. That's quite a few more than the number of people who got on ships.

I think the big players here are probably Abbott (ABT 0.71%), ticker there is ABT. It's a pretty large market cap, $220 billion. Going down, Becton Dickinson (BDX 0.46%), ticker there is BDX, $75 billion.

Quidel (QDEL 1.61%), ticker there is QDEL; am I correct that they some machines that run the tests as well as the test itself? I think that Quidel might have some advantages in that their machines are pretty cheap, a couple of hundred bucks or something. So doctors offices, and they sit a desktop. They're about the size of a laptop computer. If Quidel can get a whole bunch of those machines into doctor's offices, those machines run a whole bunch of other tests, and so maybe post pandemic, Quidel benefits a lot from getting as many machines into doctor's offices as they can.

Fulgent Genetics (FLGT -2.66%) is another one. They run the tests in-house, but it's much smaller, $4.5 billion market cap. They have an at-home test that you do at home and then send back to them. That might be an advantage. Although I wonder if at-home tests are going to be included in the requirements, because you can imagine somebody can just take the test and not do anything with it, wave it in the air, send it back to them. You think that maybe they would expect to have somebody observing the person doing the test to make sure it was done properly.

Speights: Yeah. There's always that chance too that somebody had a test and then became infected in between from the time they had the test and the time they got aboard on the flight. The devil's in the details there. I think you are right. I think some of the smaller companies that you mention might get a bigger boost. Obviously, Abbott Labs is a huge company, big player. I think they could benefit from this because they do have a rapid test that has really taken off. It's probably not going to move that stock all that much.

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Stocks Mentioned

Abbott Laboratories Stock Quote
Abbott Laboratories
$113.24 (0.71%) $0.80
Becton, Dickinson and Company Stock Quote
Becton, Dickinson and Company
$252.30 (0.46%) $1.16
Quidel Corporation Stock Quote
Quidel Corporation
$99.91 (1.61%) $1.58
Fulgent Genetics, Inc. Stock Quote
Fulgent Genetics, Inc.
$56.08 (-2.66%) $-1.53

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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