The Corona Babies Are Coming — Invest Accordingly
I'm willing to bet you know someone who recently got pregnant.
And if not, you know someone who knows someone who recently got pregnant.
How would I know that? Well, it's pretty simple...
The combination of months-long lockdowns and disruptions to health services and access to contraceptives during the COVID-19 pandemic has created a perfect storm for new pregnancies.
You know how it works: isolated adults – contraceptives = baby. (See the birds and the bees for reference.)
This won't be the first time the world experiences a baby boom following a natural disaster. The scenario has played out many times before.
In the months following the Ebola epidemic in 2016, there was a spike in births in West Africa. Likewise, the SARS outbreak in 2002 initially led to a decline in new babies being born in Hong Kong, but what followed was a +30% increase in birth rates compared to the previous year.
And it's not just viral pandemics that lead to increased numbers of pregnancies. A 2008 paper published in The Journal of Population Economics found that some hurricane and tropical storm advisories “are associated with a positive and significant fertility effect.”
So how will the coronavirus lockdown affect birth rates?
Well, according to recent data from the United Nations, the COVID-19 pandemic could result in as many as 7 million unintended pregnancies. The UN says:
Globally, around 450 million women across 114 low- and middle-income countries use contraceptives... If health services remain disrupted and lockdowns continue for six months, some 47 million in these countries may not be able to access modern contraceptives, resulting in around seven million unintended pregnancies.
Of course, not everyone agrees we'll see an increase in birth rates. A recent study published in the Journal of Psychosomatic Obstetrics and Gynecology suggests the lockdown may not lead to more pregnancies. Its study shows that nearly 82% do not intend to conceive during the pandemic crisis.
However, there's one thing we absolutely know for certain about pregnancies: About 50% of all pregnancies in the U.S. are unplanned. So it really doesn't matter whether or not people intend to conceive. Fertile adults will make babies. Nature doesn't care about our intentions.
What this all means is sometime next year, I think we should expect an increase in child births. And investors should position themselves accordingly.
The baby care products market is currently worth approximately $80 billion. So we're not talking about a burgeoning market by any means. Even without consideration of the COVID-19 effect on birth rates, forecasts estimate the baby care product market to be valued at nearly $110 billion by 2026.
Baby Care Products Market Valuation (2018–2026)
Leading the baby market today are major companies like Johnson & Johnson (NYSE: JNJ), Procter & Gamble (NYSE: PG), Kimberly-Clark Corporation (NYSE: KMB), and Nestlé (OTCPK: NSRGY).
3 BLUE-CHIP DIVIDEND STOCKS THAT COULD DOUBLE
Get fat checks while you wait for your big payday when the stock takes off
Go for 100% plus gains with:
- The dirt-cheap tech stock that is a single way to play the red-hot 5G, AI and IoT trends.
- A high-yielding stock trading at a 10-year low that’s about to break out.
- And boost your income instantly with an almost 5% yield in an industry President Trump loves.
JNJ is, of course, well-known for its baby products including shampoos, powders, and lotions. The company has an entire website dedicated to its baby products.
Meanwhile, Procter & Gamble and Kimberly-Clark are leading providers of diapers with brands including Pampers and Huggies, respectively. Both companies (and JNJ) also manufacture a multitude of baby care products like baby wipes. Meanwhile, Nestlé is the largest provider of baby formula in the world.
Other major baby stocks include Natus Medical (NASDAQ: BABY), maker of birth center equipment, and companies like The Children’s Place (NASDAQ: PLCE) and Carter's (NYSE: CRI), which are specialty retail companies that sell apparel for children.
As one of the world's largest toy manufacturers, Mattel (NASDAQ: MAT) is another major baby stock. The company's Fisher-Price division makes baby gear products, including baby monitors, booster seats, bouncers, car seats, high chairs, strollers, baby swings, tubs, and potties.
Makers of physical baby products aren't the only ones who stand to gain from a baby boom. Products and services aimed at new parents also stand to gain.
Among the more important services for new parents is therapy. According to the Mayo Clinic, postpartum depression affects over 3 million American women each year. And more babies means more women seeking help with postpartum depression.
The treatment of postpartum depression today mostly involves therapy of some sort, although anti-depressants are also sometimes prescribed.
Some, including our resident expert on alternative medicines, Jeff Siegel, believe psychedelic microdosing — taking tiny amounts of psychedelic drugs — can help alleviate symptoms of postpartum depression, as well as a host of other mental afflictions. Jeff plans to exclusively release a paper on his arguments to Energy and Capital readers soon. So be on the lookout for that.
Whether it's companies providing products for baby care or those providing products and services for new parents, investors would be wise to prepare for a baby boom in the next several months.
Until next time,
As an editor at Energy and Capital, Luke’s analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing’s Bull and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.
Energy Demand will Increase 58% Over the Next 25 Years
After getting your report, you’ll begin receiving the Energy and Capital e-Letter, delivered to your inbox daily.