Corona Doom 3.0: Omicron Surge. Profiting From The Boom In COVID-19 Testing Due To The Omicron Wave

COVID testing in a parking garage in Miami on Tuesday (photo via Jordan Levin). 

Good Luck Getting Into A Medical Clinic

A woman we know got in a car accident over the weekend. Her injuries weren't urgent enough to require a visit to an emergency room, but she wanted to get them examined, to be on the safe side. She went to three medical clinics and saw the same thing: lines around the block for COVID testing. 

The Omicron Paradox

The apparent paradox here is that the Omicron variant seems to be the mildest version of the novel coronavirus yet, but the demand for testing is nevertheless through the roof. As evidence of its mildness, physician and researcher Dr. Avi Dascalu noted on Twitter on Tuesday that none of 341 Omicron-infected subjects in an Israeli study were currently hospitalized. 

And Nate Silver pointed out that investors were betting against Omicron's severity by bidding up shares of movie theater chain Cinemark Holdings, Inc. CNK, cruise line Carnival Corporation CCL, United Airlines Holdings, Inc. UAL, and MGM Resorts International, Inc. MGM--all businesses that would be hammered by another round of COVID lockdowns. 

The Abnormality Of Omicron

The pseudonymous exiled professor "Eugyppius" wrote recently that Omicron is not normal:

Omicron is not normal. No immediate progenitors are known; its closest relatives are viruses last seen in early- to mid-2020. The orthodox explanation for this awkward fact, is that it has spent the last 18 months lurking “in a geography with poor genomic surveillance … or … in a chronically infected individual.” The simpler explanation is that it leaked from a laboratory.

As he suggests there, the abnormality of Omicron has led to speculation that it might have been developed as a sort of "contagious vaccine", immunizing people against more severe variants of COVID. Whether or not that's the case, one thing is clear: there's a huge amount of COVID testing happening now. Let's look at a way to profit from it. 

Profiting From COVID-19 Testing

One of the beneficiaries of the COVID testing boom is Fulgent Genetics, Inc. FLGT. As regular readers know, each day the market is open, our system gauges stock and options market sentiment to rank thousands of securities by their potential return over the next six months. Fulgent was our #7 name in Tuesday's ranking (Readers of our previous post, Time To Buy Tesla, will note that Tesla remained a top name on Tuesday). 

Screen capture via Portfolio Armor on 12/21/2021.

Tuesday wasn't the first time FLGT appeared in our top ten. It was also one of our top ten names on September 23rd, 2020. Over the next six months, it finished up 188%. 

More recently, FLGT was one of our top ten names last June (we wrote about it here at the time). It's up about 23% since. 

We're not the only ones bullish on Fulgent now. Seeking Alpha's Quant Rating on the stock is "Very Bullish", with A and A+ grades from every component factor from valuation to earnings revisions. 

In Case We're Wrong About Fulgent 

As always, we suggest readers consider hedging if they decide to buy Fulgent or one of our other top names. Hedging will give you some protection in the event that we end up being wrong, or the market moves against us. You can use our website or our iPhone app to scan for optimal hedges on Fulgent Genetics. It wouldn't have made our top ten if it weren't cost-effective to hedge.