Solid carbon dioxide (also knows as dry ice) has been extremely essential in the food processing and manufacturing sector. But now it is going to be a key component in getting the vaccination accessible to all Americans in 2021. Dry ice is carbon dioxide gas processed into a solid form. As a cooling agent, dry ice is used for preserving temperature-sensitive items. Dry ice is used in the healthcare sector to transport and store biological samples, blood, and vaccines.
Dry Ice Use to Aid in Vaccine Distribution
The vaccine from Pfizer (PFE) is so delicate that it has to be kept at -70 degrees Celsius. That’s colder than most freezers in the world and even colder than the temperature at the south pole. Hence normal freezers are not going to cut it. Dry ice seems to be the only solution for this. Dry ice is going to be crucial in transporting the vaccine from the US to all different parts of the world. Distribution of the vaccine is a challenge for many, but for dry ice companies, that nightmare may be a huge business opportunity. Because of the cold storage requirements for the Pfizer vaccine, dry ice stocks have been trending in anticipation of the increased demand.
The leading dry ice makers in the US are bombarded with inquiries not only from the vaccine manufacturers but also from different district hospitals, public health departments as well. Not only during the transportation but also during the storage, dry ice would be essential as huge volumes are required. Considering the need for transportation and storage for the vaccine, the dry ice companies are going to have increased demand very soon. The increased demand and lack of suppliers would mean increased pricing.
Many dry ice companies are small and private, but there are a few publicly traded companies that operate in this space which makes for good investment opportunities. Here are some of the most notable few companies in this space. With the P/E ratio ranging from 26 to 60, these stocks are not cheap, but the increased revenue would mean increased EPS, which may make the scenario favorable for these stocks. Also, one positive factor for all these 3 stocks is the decent dividend yield! Here are the top 3 companies by revenue and market share. Below is the comparison based on different parameters.
Linde Plc (NYSE: LIN)
Linde Plc is an American-German multinational chemical company. Founded in 1879, this 141-year-old company is the largest industrial gas company by both market share and revenue. With revenue over 28B, this is among one of the largest fortune 500 companies in the world. Though the current P/E of the stock is high, the stock could have a significant upside in EPS in the near future, which may mean that the stock price can go up in the medium term.
As the largest beneficiary of the dry ice demand surge, a lot of money can flow into this stock, which can see the stock price move up. Also, a decent dividend yield would ensure the investors would keep this stock on their radar.
Air Products and Chemicals, Inc. (NYSE: APD)
Air Products and Chemicals, Inc. is a leading American company that primarily deals in gases and chemicals for industrial use. Air Products and Chemicals, Inc. serves customers in healthcare, food, energy, and technology space. Air Products also produces liquid hydrogen and liquid oxygen fuel for NASA. Headquartered in Allentown, Pennsylvania this company is going to be a huge beneficiary of the surge in demand for dry ice.
With revenue of close to 9B this stock can improve it’s revenue and also can improve the EPS. The stock has corrected a bit in last 1 month after a huge surge in last 7-8 months and can rebound again in near future.
L’Air Liquide S.A. (OTCMKTS: AIQUY)
L’Air Liquide S.A. is a French company that supplies industrial gases to various industries including healthcare, chemical, and electronic companies. Founded in 1902, this is the second-largest supplier of industrial gases in the world by revenue, operating in over 80 countries.
The stock has moved up significantly in the last 7-8 months in line with the broader market. The stock is poised for significant uptrend as investor interest increases in next few months. With a P/E ratio of 26 and dividend yield of almost 1.8%, this stock is a safe bet in the current scenario. The stock has huge potential to move up and has extremely limited downside risk. As lots of smart money move into this segment, a huge uptrend is expected in this stock.