Wednesday, October 15, 2014

Hazmat-suit makers are surging again as a new Ebola case emerges

A slide in the shares of companies dealing in protective gear that have been surging lately on the back of Ebola fears didn't last more than a day. Fresh reports of a second health worker testing positive for the deadly virus in Dallas may have given Ebola-related stocks a second boost. 

In premarket trading Wednesday, shares of hazmat-suit maker Lakeland Industries Inc. (LAKE) and Alpha Pro Tech Ltd.(APT), which makes protective gear such as facemasks, were up 15% and 23%, respectively. Shares of Versar Inc. (VSR) , whose PPS unit makes hazmat suits and mobile decontamination shelters, was up 23% as well. 

A second health-care worker who cared for Thomas Eric Duncan, the Liberian man who died of Ebola in a Dallas hospital, reported a fever on Tuesday and the Texas Department of State Health Services said on its website on Wednesday that the worker has tested positive for Ebola. 

Shares of companies riding on Ebola fears had relinquished earlier gains on Tuesday, with Lakeland and Alpha Pro Tech closing with losses for the first time in days, dropping 26% and 27%, respectively. Strategists have cautioned investors against trading in those companies, which have been trading at a daily volume that exceeds the number of outstanding shares, potentially leading to an investor trap. 

"If you're looking for evidence of investors playing the situation, this is as good a place to start as any," said Dan Greenhaus, chief global strategist at BTIG, told MarketWatch earlier this week. 

Ebola-related gains dissipated for those companies on Tuesday after the World Health Organization said that while new cases of Ebola are expected to rise, the rate of new cases in the hardest-hit areas of West Africa has actually slowed. 

By Barbara Kollmeyer