If speculators want hot stocks to chase, they should at least pick ones that make sense from the standpoint of the company's actual performance. They can chase potential performance, if they like. But at least the business should be a good one.
It makes no sense whatsoever to bid up the stock of a bankrupt company like Hertz (HTZ) . This is a car-rental company that was in trouble already prior to the coronavirus, its business model decimated by Uber (UBER) and the ease of comparing car quotes online. Margins have been trimmed, and there's a new form of competition.
Chase health-care stocks if you're after outperformance not from a short-term greater-fool bounce but potentially from the underlying business.
One Japanese stock with a U.S. listing worth considering is Shionogi & Co. Listed as T:4507 with a U.S. ADR (SGIOY), the stock is trading up 2.2% on Monday, on a day the broad Topix index in Tokyo is down 0.2%.
Osaka-based Shionogi launched an antibody test kit in Japan at the start of June, working with unlisted company Micro Blood Science, which has licensed the kit.
The production and implementation of those kits has taken a big step forward on Monday. Shionogi today announced a licensing deal with three universities to put its test kits into widespread practical use.
The advantage of the Shionogi kit is that it tests for the virus in saliva or sputum, and delivers results quickly, in around 25 minutes. The test is therefore less invasive than the nasal swabs currently used.
The high speed of results also implies that the tests could be very useful for travel. The tests could also be useful in health-care settings or when establishing whether a person needs to continue quarantine.
The new tests use a method called SATIC, or signal amplification by ternary initiation complexes. This detects genes, mutant genes and molecules such as proteins and metabolites. The test can quickly identify the presence or absence of the SARS-CoV-2 virus that causes Covid-19.
The SATIC technology involves heating a saliva sample, and adding a reagent that will change color to indicate the presence of viruses. Patients should even be able to take their own saliva sample and conduct the test, which doesn't require specific equipment, just a color change like a pregnancy kit.
The current nasal-swab tests use polymerase chain reaction as a testing method, searching for nucleic acids contained in any virus in the samples. This takes more time, requires a chemical to detect the virus, and is more-complex for health-care workers to complete, during which time the health-care workers are at risk of infection from a cough or sneeze.
The new test also does not deliver false positives or negatives, the company says, and can detect cases where the person does not exhibit any symptoms.
Shionogi will be working with Nihon, Gunma and Tokyo Medical universities to develop the testing kits further, according to Monday's announcement. The joint research team has succeeded in developing the new testing method, the company says.
Japan approved saliva tests for the coronavirus earlier this month. So we should watch to see if there's any confirmation this testing kit can be put into widespread use.
Shionogi's shares are back at the level at which they began the year. They have climbed 61.0% since their lows on March 18, and show no signs of ending that run.
On the speculative front, the moon shot would be if Shionogi's efforts to develop a vaccine for Covid-19 succeed. It is working on a new-gen recombinant protein vaccine, which inserts the DNA encoding an antigen into the pathogen, then purifies that antigen, with Japan's National Institute of Infectious Diseases as a research partner. It has already set in motion an application to produce its vaccine with Api Co. and its Unigen unit, which can make that kind of vaccine, while the Japanese government reviews the vaccine's efficacy and safety.
It aims to initiate clinical trials this year. The Japanese government moves at a snail's pace on pharmaceuticals approvals, so the review process may take longer than you'd expect in the United States. But you can be sure they'll be doing their equivalent of a hustle, maybe more of a shuffle but as fast as they can comfortably go.