Covid-19 caused the biggest stock market crash since 2008-09. And now we have something new to worry about – hantavirus.
The early signs suggest that this isn’t on anything like the same scale. But it might be significant for one FTSE 100 stock in particular.
Not another pandemic?
So far, there have been reports of up to 11 cases of hantavirus reported on a cruise ship in Argentina. And a lot of familiar phrases are coming back again.
Talk of flu-like symptoms, isolating at home, and physical distancing are back in the news. But we’re a long way from a full-blown pandemic – so far.
Nonetheless, there are some familiar goings on in the stock market. Moderna – the mRNA vaccine firm – has seen its stock jump 13.95% in the last week.
This isn’t just muscle memory. There’s an international effort under way to work on a vaccine and that might be a genuine boost for the company.
Even if the stock market doesn’t crash – and I’m not convinced it will – it’s worth noting. And it might also be significant for a FTSE 100 stock.
Vaccine demand
Shares in Croda International (LSE:CRDA) surged during Covid-19. Sales of the firm’s lipids (used in vaccines) went through the roof and the stock followed.
Since the end of the pandemic, customers focused on using existing inventories. That meant they stopped buying and the company’s sales crashed.
On top of this, the firm didn’t use its Covid-19 windfall particularly well. It made some bold acquisitions at what turned out to be high prices.
Management seemed to be taking the view that mRNA vaccines were the future. But over the last few years, this has looked like a big mistake.
The hantavirus outbreak, however, might be a big boost. And with inventory levels starting to stabilise, could the stock be set to surge again?
Time to buy?
Increased vaccine studies might give Croda a short-term boost. But that – by itself – isn’t a good reason for a long-term investor to think about buying.
Investors have seen once what can happen when a temporary surge in demand wears off. And it would be a huge mistake to forget the last few years.
Renewed interest in mRNA vaccines, however, might be a durable trend. In that situation, windfalls could become much more frequent.
That would meaningfully change the equation for investors. And if this is the case, Croda shares could be really interesting right now.
The business is already showing signs of recovery. Add the potential for increased vaccine studies over the long term and I think this is worth a look.
Diversification
I’m not a global health expert (though some of my colleagues are). But from what I can see, hantavirus doesn’t look like the next Covid-19.
It’s too early to start seeing the outbreak as a catalyst for a stock market crash. It is, however, worth thinking about what it might mean.
A lot of the stocks I own could be affected in a big way by another pandemic. But this isn’t a risk I spend a lot of time thinking about.
Maybe I should. And while there’s a lot more to the business, Croda could be a really good way to add some diversification to my portfolio.
