Why 5 tiny ASX stocks have soared because of the Coronavirus

We examine how the Coronavirus (COVID-19) kick-started a massive run-up in the share prices of 5 unique Aussie small-caps.

Money can’t make you happy

On 3 March, the US Federal Reserve announced an emergency rate cut of 50 basis points.

This was of course an attempted ‘fix’ to the unfolding Coronavirus crisis.

‘In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate,’ the Fed elaborated.

US markets fell sharply in response, with the NASDAQ and S&P500 giving up the gains they recorded during the day.

This comes after the Reserve Bank of Australia cut interest rates by 25 basis points on Tuesday, taking the official cash rate to 0.50%. Like the US Fed, the RBA’s decision was motivated by the Coronavirus outbreak.

Top 5 small-caps benefitting from the Coronavirus

Besides policy intervention from central banks, in the last couple of months a number of ASX listed companies – mainly in the health space or adjacent – have come out touting some sort of solution and/ or form of assistance with the Coronavirus crisis.

Unsurprisingly, the share prices of these companies have run-up significantly (and quickly), amidst a flurry of lofty news announcements. With that in mind, below we look at some of the most prominent Australian stocks involved either directly or indirectly in the creation of these solutions:

Name

Ticker

Share Price

Market Cap

1-Month Return

Zoono

ZNO

$2.220

$362.55m

136%

Uscom

UCM

$0.370

$55.37m

186%

Aeris Environmental

AEI

$0.575

$122.97m

55%

Biotron

BIT

$0.125

$87.74m

38%

Eagle Health Holdings

EHH

$0.185

$64.96m

54%

*Data correct prior to the market open 4 March.

You can go LONG or SHORT on any of the above stocks with an IG Trading Account. Find out more here.

Zoono share price +136%

Maybe the most prominent ASX company offering its support to the Coronavirus crisis; Zoono is centrally involved in the production of antimicrobial sprays and wipes that kill a variety of pathogens, including: viruses, bacteria, mould and fungi.

Hype around the company initially built after Zoono revealed that its Microbe Surface Sanitiser and Hand Sanitiser products had been sent to a Germany laboratory to test their effectiveness against the Coronavirus (COVID-19) strain.

The stock rose in response to that first announcement and continued to run higher after it was more recently announced that the results from the German lab showed:

‘That Zoono's Z-71 Microbe Shield (the same Zoono technology used in Zoono hand sanitiser) is >99.99% effective against COVID-19.’

Uscom share price +186%

Unlike the other companies on this list, Uscom specialises in non-invasive cardiovascular and pulmonary monitoring devices. This is of vital importance, because as the company points out, COVID-19 'patients die from cardiovascular pulmonary failure.'

Moreover, investors were likely pleased after the company noted in a recent presentation that its USCOM 1A has been specifically and generally ‘included in China National Health and Medical Commission Guidelines for treatment of severe coronavirus patients in adults and children.'

China has currently reported 92,880 cases of COVID-19.

Aeris Environmental share price +55%

Like Zoono, Aeris produces disease fighting disinfectants.

Positively, the company announced on 27 February that 'the Singapore National Environmental Agency (NEA) that that its proprietary hospital-grade disinfectant with residual, Aeris Active, has been added to a list of approved general products for the disinfection of COVID-19.'

In response to the unfolding Coronavirus situation, the company said that it is scaling up production, to meet 'the growing demand in China and the APAC region.’

Biotron share price +38%

As a specialist in drugs targeting viral diseases, Biotron has risen to prominence in the last few weeks after announcing that the company would evaluate its 'compounds for activity against coronavirus'.

These compounds, noted the company ‘can reduce the levels of coronavirus by 90 - 100% in infected cell cultures.’

Biotron is currently in the process of testing the effectiveness of these compounds against the Coronavirus (COVID-19) strain, updating investors in late-February that these tests are 'progressing as quickly as possible.'

Eagle Health Holdings share price +54%

Unlike the other companies discussed above, Eagle Health's stock has been bid up, not due to the creation of a specific medical solution, but likely because of a key distribution agreement between the company and Zoono.

As part of this agreement, the company will be responsible 'for the bulk import of Zoono's formulations to its wholly owned GMP certified pharmaceutical facility in Xiamen China, where Eagle will carry out the labelling, packaging and distribution into Eagle's extensive existing channels.'

How to trade the unfolding situation

What are your thoughts? Are these stocks all hype or are they the real deal?

You can trade any of the stocks we have highlighted above, utilising CFDs, through IG’s world-class trading platform right now. For example, to buy (long) or sell (short) Zoono using CFDs, follow these simple steps:

  • Create an IG Trading Account or log in to your existing account
  • Enter 'Zoono' or 'ZNO' in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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