As of midnight tonight, Victoria will become the first state to make the wearing of masks mandatory in coronavirus lockdown regions. In addition, the Australian Medical Association has also called for the national cabinet to establish a nationwide mask policy.
As a result of these measures, the demand for face masks has gone through the roof. Over the weekend, it was reported that Chemist Warehouse stores in Victoria sold 1.5 million masks.
Here are some ASX shares that have exposure to face masks and which could benefit from the surge in demand.
ASX shares that could benefit from mandatory face masks
Australian Pharmaceutical Industries Ltd (ASX: API)
According to an article in yesterday’s The Australian, Australian Pharmaceuticals (API), which operates the Priceline Pharmacy chain, saw a 30-fold increase in demand for face masks. In order to ease the panic buying, the company assured customers that there are sufficient masks in stock to meet demand.
In late April, the company released its half year results for FY20, with API highlighting increased demand as a result of the pandemic. Despite the surge in demand, the API share price is still trading nearly 18% lower for the year.
Wesfarmers Ltd (ASX: WES)
Wesfarmers could be another ASX share to watch as the company’s subsidiary Bunnings experiences a surge in demand for face masks. As a result of the soaring demand, Bunnings has placed a purchase limit on the product with customers only allowed to purchase a maximum of 50 masks.
In addition to face masks, Wesfarmers also has exposure to other trends seen during the pandemic. The company’s Officeworks stores have seen a surge in demand as consumers establish home offices, whilst Bunnings has also benefitted from the increased interest in home improvements and DIY projects.
Ansell Limited (ASX: ANN)
Ansell is a global leader in manufacturing and distributing health and safety protection solutions. The company operates in the industrial and healthcare sectors and could see continued growing interest in its personal protective equipment.
In its market update in late March, Ansell informed investors that the company had seen very strong demand for its AlpahaTec hand and body protection products, whilst also seeing a surge in demand for single-use and surgical gloves.
Keep an eye on these ASX shares
The mandatory order to wear masks in Victoria comes as the state recorded its highest daily number of COVID-19 cases earlier today. With fears of a second wave of infections spreading across the country, the demand for facial masks and other protective equipment could see a renewed surge.
Although the demand for face masks won’t turn the companies listed here into automatic market darlings, it does highlight the essential nature of their products and also reflects the changes in consumer behaviour. As a result, I think it’s important for investors to keep an eye on these defensive companies and create a watchlist of other auxiliary services.
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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Ansell Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.