Allied Healthcare Products Inc (NASDAQ: AHPI) is making a run for the top in the market this morning, gaining more than 119% in the premarket. The gains follow a more than 4-fold increase in value in yesterday’s trading session.
While the gains are clear, the reason for them isn’t. The truth of the matter is that the company hasn’t issued any press releases or SEC filings as of late. So, what’s the deal?
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AHPI Stock Is Benefitting From Coronavirus News
As mentioned above, the gains coming from Allied Healthcare Partners aren’t part of some news release or SEC filing. In fact, the gains have more to do with the company’s products in general.
AHPI makes several products, but what seems to have the market buzzing is its portfolio of respiratory health products. So, why are these so important?
Well, it all has to do with the Wuhan Coronavirus (COVID-19). The coronavirus is a form of upper respiratory illness. This means that in treating those with COVID-19, physicians will look for products that support positive respiratory health.
While AHPI hasn’t issued any news, the company really doesn’t have to. The bottom line is that the market has been a sea of red, with the exception of stocks having products that could benefit patients with the virus.
Considering the respiratory health products created by Allied Healthcare Products, it only makes sense that as the coronavirus epidemic continues to spread, the company will see an increase in demand, ultimately relating to increasing revenue and a push toward earnings.
What You Should Be Watching For Ahead
Moving forward, Allied Healthcare Products will be an interesting stock to watch. However, investors should be aware that in general, when we see gains in multiples like this, profit taking shortly follows.
While buying at these levels may be a risky play, a smart move may be to wait for the profit taking and purchase the stock when it falls a bit.
In the long run AHPI may be a very strong play. The truth of the matter is that the Wuhan Coronavirus isn’t likely to go anywhere any time soon. In fact, experts suggest that we are just beginning to see the spread of the illness.
With that said, companies that focus on the treatment or prevention of the virus are likely to see strong gains ahead. AHPI falls right into that category.
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