{"id":63115,"date":"2014-11-04T17:53:55","date_gmt":"2014-11-04T22:53:55","guid":{"rendered":"http:\/\/countingpips.com\/?p=63115"},"modified":"2014-11-04T19:58:07","modified_gmt":"2014-11-05T00:58:07","slug":"should-you-buy-this-stocks-ebola-rally","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2014\/11\/should-you-buy-this-stocks-ebola-rally\/","title":{"rendered":"Should You Buy This Stock\u2019s \u201cEbola Rally\u201d?"},"content":{"rendered":"
November 4, 2014<\/div>
\r\n<\/div><\/div>

By WallStreetDaily.com<\/u><\/a> – Richard Robinson<\/a>, Ph.D., Financial Analyst <\/em><\/p>\n

It\u2019s safe to say that the month of October was wild for Lakeland Industries<\/strong> (LAKE<\/a>).<\/p>\n

The stock began the month with a 29% one-day gain to $9.01. Another massive one-day gain on October 13 \u2013 this time 47% \u2013 pushed shares to a 52-week high above $29.<\/p>\n

Since then, the volatility hasn\u2019t stopped, with a mixture of large daily gains and losses.<\/p>\n

Take a look for yourself\u2026<\/p>\n

\"Lakeland's<\/p>\n

Now, you wouldn\u2019t think that a company responsible for manufacturing industrial safety garments and protective clothing would see such volatility.<\/p>

\r\n
\r\n

Free Reports:<\/p><\/div>\r\n

\r\n

<\/a>\r\n\t Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p>

\r\n
\r\n
\r\n

<\/a>\r\n\t Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p>

\r\n<\/div>\r\n

\r\n
<\/div>\n

So what\u2019s caused such a wild ride?<\/p>\n

Ebola Fears Ignite Lakeland Shares<\/h2>\n

In a word: Ebola<\/a>.<\/p>\n

Lakeland\u2019s business basically involves equipping any workplace where protective clothing is required.<\/p>\n

We\u2019re talking about shirts, pants, lab coats, coveralls, etc. for companies in areas like oil, chemicals, automotive, construction, factory manufacturing, utilities, healthcare, medical labs, science labs, electronics, the military, emergency services\u2026 you get the picture.<\/p>\n

It also involves making hazmat suits for protection from hazardous chemical or biological toxins.<\/p>\n

Ebola definitely qualifies as hazardous.<\/p>\n

Indeed, last week, Lakeland reported that it received orders for one million of its protective suits amid the Ebola outbreak. It said monthly production capacity for its ChemMAX and MicroMAX protective suit lines was up\u00a050% from August 2014,\u00a0and is on track for a 100% increase by January 2015.<\/p>\n

These orders are in addition to a surge in sales for the company\u2019s hoods, gloves, and foot coverings.<\/p>\n

As a result, the stock has surged, annihilating the S&P 500 over the past five weeks. Indeed, it\u2019s up 150% year to date, versus 8.7% for the broader market.<\/p>\n

As you\u2019ll notice, though, the stock has trended down since hitting its 52-week high in mid-October, as investors wonder whether the recent price spike is sustainable.<\/p>\n

You can see why\u2026<\/p>\n

Shares Are up, but the Balance Sheet Is Way<\/em> Down<\/h2>\n

While the Ebola outbreak has boosted Lakeland\u2019s balance sheet in the short term, I don\u2019t believe the increase is sustainable in the long term.<\/p>\n

A look at the company\u2019s latest quarterly filings tells the story\u2026<\/p>\n

In its most recent quarter, Lakeland experienced a steep decline in its earnings per share, compared to its corresponding performance a year earlier. How steep?<\/p>\n

EPS tanked, falling from $0.74 last year to -$0.07 this year.<\/p>\n

In dollar terms, the company\u2019s quarterly net income fell by $4.1 million to a loss of $0.38 million.<\/p>\n

For the six-month period through July 31, 2014, net income also dropped to a loss of $0.38 million, compared with a $3.3-million gain a year ago.<\/p>\n

These aren\u2019t positive trends, to say the least.<\/p>\n

During the same quarter, Lakeland\u2019s net operating cash flow tumbled into negative territory \u2013 to -$1.9 million.<\/p>\n

Now, while it\u2019s true that the company\u2019s cash flow will increase with the recent sales surge, the sustainability of that rise is shaky, because the driving force behind it is the fear of an Ebola outbreak in the United States \u2013 a very unlikely event.<\/p>\n

Investors seem to be realizing this. And as Ebola fears wane, Lakeland shares will revert to the mean. And that means to levels significantly below today\u2019s price.<\/p>\n

Avoid the hype, and protect your portfolio from needless risk.<\/p>\n

Richard Robinson<\/p>\n

The post Should You Buy This Stock\u2019s \u201cEbola Rally\u201d?<\/a> appeared first on Wall Street Daily<\/a>.
\nBy Richard Robinson<\/a><\/p>\n

\n

Related Posts<\/h3>\n
    \n
  1. The Biggest \u201cFake\u201d Stock Rise of 2014?<\/a><\/li>\n
  2. Veteran Pioneer Set to Dominate Wearable Tech<\/a><\/li>\n
  3. Tractor Supply\u2019s 20% Rebound Is Only the Start<\/a><\/li>\n
  4. The Three Most Dangerous Stocks in the Market<\/a><\/li>\n<\/ol>\n<\/div>\n

    Article By WallStreetDaily.com<\/u><\/a><\/p>\n

    Original Article: Should You Buy This Stock\u2019s \u201cEbola Rally\u201d?<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

    By WallStreetDaily.com – Richard Robinson, Ph.D., Financial Analyst It\u2019s safe to say that the month of October was wild for Lakeland Industries (LAKE). The stock began the month with a 29% one-day gain to $9.01. Another massive one-day gain on October 13 \u2013 this time 47% \u2013 pushed shares to a 52-week high above $29. […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-63115","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/63115","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=63115"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/63115\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=63115"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=63115"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=63115"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}