Alpha Pro Tech Limited: Here Is What It Looks Like Today

Introduction

On February 9, 2021 I produced the article titled “Alpha Pro Tech Well-Positioned To Participate In COVID-Led Growth.” In that original article I pointed out that Alpha Pro Tech (APT) was well-positioned to participate via earnings growth because of selling masks and other protective gear relevant to the COVID pandemic. I also provided earnings estimates courtesy of FactSet and corroborated by Reuters on Yahoo Finance and by Standard & Poor’s courtesy of Seeking Alpha. To date, those earnings estimates have not changed. Unfortunately, the same cannot be said about the stock price.

Anyone who has followed my work for a long time knows that I trust earnings (fundamentals) more than I do price volatility. Nevertheless, although not alone in that position, I believe we are certainly in the minority. The stock has dropped from $16.49 per share when I wrote the article, and as I write this is down to $11.41 for an additional 8.24% drop today. Which means the stock has essentially fallen about 30% since I wrote the original article.

Now, a 50% plus drop is certainly concerning, it becomes less concerning when you consider the fundamentals in the valuation that they represent. Additionally, when you consider the short time period that this has happened over, this is hardly a long-term mistake. It may turn out to be, and time will tell. However, I am not a day trader and I do not forecast short-term stock price movements, and as I have written many times, I do not trust stock price movements, I trust fundamentals. The fundamentals of this company have not deteriorated, in fact, they have gotten slightly better than they were when I first wrote the article. The fact that people are currently selling the stock means nothing if in the long-term scheme of things, the earnings come in as expected over the next two years.

In other words, the long-term upside to this investment remains the same. If that turns out to be true, then the smart thing would be to double down on this investment once the bleeding stops. I am confident that is going to happen because this was a solid business prior to COVID, and will likely be a solid business post COVID. On the other hand, I am not confident that this business will keep growing at these recent extraordinary rates once COVID is over. Nevertheless, I also shared excerpts from a Wall Street Journal article that suggested that “Covid 19 will be around for years – and a big business.” Here is the excerpt from that article that I shared:

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Disclosure: No position.

Disclaimer: The opinions in this article are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks ...

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