Investors may often overlook the safety and protection industry and dismiss it in their portfolio construction.
However, with a growing population, harsh surroundings and a need for a safer planet more and more investors will be encouraged to take a closer look at this space and the materials technology industry as a valuable option that can lead to better returns.
Both individuals and organizations share a commitment to protect people’s lives and keep them safe but they cannot solve these problems alone. From helmet pads for armed forces to performance sport products, deck panels for marine crafts and Personal Protective Equipment (PPE) for first responders, companies are seeing success from creating market leading innovations by putting “people first” and developing products that make a difference, and consumers agree. Here are three reasons you should consider investing in the protection of people to diversify your portfolio:
1. Demand for Protective Gear Is on the Rise.
Even in a market downturn, a diversified portfolio affords the opportunity to invest in a variety of growing companies and industries thereby increasing the chances of better risk on adjusted returns. Companies, governments, studies and headlines point to protecting people being a top priority. Despite an economic downturn, the demand for protective gear continues to increase and remains an essential item consumers are seeking – especially with a shift in everyday habits due to COVID-19, the rise of flu season and vulnerable work conditions.
Innovation in the areas of protection has grown rapidly in the past decade and products that offer safety and comfort either in a professional or personal setting continue to gain popularity. To maximize productivity, whether on the battlefield or on the football field, at sea or in the streets, people need to be free of injury and feel protected to operate at their highest potential. From an athlete investing in a new type of running shoe, to the government backing the protection of our troops or companies supplying gear to safeguard workers from harm on the job, the range of industries businesses can reach and impact around the globe is vast.
2. Employee Safety Is Essential.
We see frequent updates of protecting against COVID-19 that are based on new research and findings. While these updates may be frustrating for everyday Americans, these frequent changes in policy are something that construction workers, car manufacturers, and coal plants, have been dealing with for decades. It’s also something that businesses like SKYDEX and others that produce PPE, have known for years. They have invested heavily to continue to design products that help create a safe and healthful environment and align with the Occupational Safety and Health Administration’s (OSHA) guidelines.
Governments worldwide have realized the importance of protecting people at work, and are putting regulations in place that require employers to address this, like an EU OSHA Directive that calls for businesses to focus on the harmful vibrations to which workers may be exposed. High-performance solutions that provide safety and comfort and do not compromise the employee’s ability to perform tasks is key. For example, SKYDEX develops products to protect people from injury and continue to perform their job even in the most extreme environments like shock events during high-speed marine craft operations. From armored vehicles to bomb suits, the leading impact mitigation company has recently expanded into PPE, sports and continues to invest in advancing unique technologies for protection. Another great example is when it became clear that N95 masks were in short supply, PPE manufacturers upped their production and 3M, along with Honeywell and others, received contracts from the Pentagon to make 39 million N95 face masks for medical workers on the front lines. Because regulations change so frequently, businesses that evolve to meet the needs are thriving.
3. Making a Difference Is a Value Promise That Consumers Want.
In today’s current environment, it’s evident that consumers are seeking out products that make them feel confident, protected, and safe to perform everyday tasks–therefore investing in companies that make these solutions is a good thing. Organizations that understand the importance of creating advanced materials that provide high-performance protection and push boundaries with technology set them apart from the competition. More and more people are drawn to the new wave of social impact efforts and companies that are passionately committed to making a positive change amidst a variety of industries – and at the end of the day consumers like to support organizations that are making a difference. By and large, it is something that individuals are willing to pay for—which means that businesses that promote doing good and protecting people, will continue to grow and prosper.
As markets fluctuate and change, you want to make sure that the company in which you are investing has a solid foundation. By choosing businesses that protect people, you can be confident that no matter what your portfolio composition, the consumer will continue to drive demand growth.
Warren Buffet once said, “Never invest in a business you cannot understand.” If you understand the value of human life and the importance of protecting people, then the businesses you invest in should reflect those same values as you build your portfolio. The opportunities for growth seem endless and the diversity of markets and potential consumers are ever-growing. While there’s no sure bet in the equity market, companies that are committed to protecting life excel and by investing in them, you can, too.
Peter Miselis, CFA, investor relations adviser. With 30 years of experience in the investment and investor relations industries, Peter harnesses the insights and perspectives gained as an equity research analyst and portfolio manager, and the deep understanding of the capital markets to be a strategic asset to his clients. Peter has developed winning investor relations strategies in a wide range of sectors with a focus on supporting management’s growth initiatives, increasing stakeholder awareness, and advancing the corporate mission.
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