Alpha Pro Tech (NYSE:APT) has been a strong performer this due to the extremely elevated demand for N-95 respirators to protect people against COVID-19. It seems that the market has decided this was all hype and all that demand will quickly go away, sending APT's earnings and stock price back to earth.
In this piece I will argue against that narrative and make the case why APT is drastically undervalued with very low downside risk based on my model comprising N95 sales and the other business lines.
Business
Alpha Pro Tech manufactures and sells disposable protective apparel and building supply products in the United States and internationally. The two segments are Building Supply and Disposable Protective Apparel.
The Building Supply segment consists of construction weatherization products, such as housewrap and synthetic roof underlayment as well as other woven material.
The Disposable Protective Apparel segment is comprised of disposable protective garments (including shoecovers, bouffant caps, coveralls, gowns, frocks and lab coats), face masks and face shields. The most prominent part and the center of my analysis are the NIOSH (National Institute for Occupational Safety and Health) approved N-95 Particulate Respirators.
It is important to note the APT's N95s are of extremely high quality. From conversations with practitioners, they are more comfortable to wear, easier to fit properly and ironically of much higher quality than 3M's N95s (ironically because the first masks of this kind were released by 3M). Because of this qualitative advantage, the masks APT produces are in high demand but basically unavailable for retail buying, instead the company has sold all its capacity into contracts and larger institutions.
Supply and Demand Picture
The important point to understand about N95 masks is that in contrast to simple cloth masks, they do protect both the persons wearing them and the outside world. There
