ASX stock of the day: Why Advance Nanotek (ASX:ANO) shares are rocketing 7%

The Advance Nanotek Ltd (ASX:ANO) share price has been on fire today, and has rocketed up 7%. Here’s what’s been going on with the company.
The post ASX stock of the day: Why Advance Nanotek (ASX:ANO) shares are rocketing 7% appeared first on The Motley Fool Australia. –

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The Advance Nanotek Ltd (ASX: ANO) share price is on fire today, rocketing 7.44% at the time of writing to $4.33. Advance Nanotek shares closed at $4.03 yesterday, but opened at $4.10 this morning before surging as high as $4.50 in early morning trading (up almost 12%).

Even though the company’s share price has cooled slightly since then, it’s still a hefty move upwards. Especially if you consider this company was asking $3.40 per share as recently as 15 February. That means Advance Nanotek is up close to 30% in just under a month.

So what is this strangely-named ASX company? And why are its shares enjoying their day in the sun today?

Advancing to sunscreen

Advance Nanotek describes itself as Australia’s leading manufacturer of zinc oxide powder. It also manufactures aluminium oxide (also called alumina). The company has been around since 1997 and listed on the ASX back in 2003.

Since then, Advance Nanotek shares have had a rather wild ride. The company was trading around the $2 mark back just before the global financial crisis. But the years that followed were not kind, and the company sank as low as 8 cents per share.

However, its fortunes were revived in 2019 when it reached a new high of more than $7. An investor who made a well-timed trade buy at 8 cents per share in mid-2012 would have seen an incredible gain of nearly 9,000% by mid-2019. But there’s no use crying over spilled milk.

Zinc oxide is a chemical with widespread industrial applications (some of which aluminium oxide also share). These include as an additive in foods, medicines and cosmetics, as well as in industrial materials like batteries, concrete, paints, plastics and glass.

It is also used in sunscreens and cosmetics that offer supplementary sun protection. This is the area that Advance Nanotek specialises in. Its flagship products are ZinClear XP and ZinCare IN. There are zinc oxide dispersion solutions that are designed to be easily incorporated into the manufacturing process for toothpaste, sunscreens and sunsafe cosmetics.

What’s with the Advance Nanotek share price today?

Well, it’s not immediately obvious. There have been no major ASX announcements out of the company since mid-February. But there could be a macro factor at play here.

Back in September last year, Advance Nanotek delivered a depressing sales update to investors. At the time, it told the markets its poor sales over the previous few months were largely due to the coronavirus pandemic. More specifically “due to the significant travel restrictions caused by the second and third waves of COVID-19 in Europe and the US”.

That makes sense. If people are travelling less, it’s logical to assume they need less sunscreen.

Now yesterday, Prime Minister Scott Morrison announced a significant $1.2 billion stimulus package for the travel industry. This included a major subsidy for airline travel, also known as ‘cut-price tickets’, of which there will be 800,000.

Further, according to the ABC, this morning (our time) US President Joe Biden announced that all Americans can be vaccinated against COVID-19 by the end of April 2021.

That’s a double whammy of good news for a company that has claimed a drop in tourism has been catastrophic for its business. This could well be the reason why the Advance Nanotek share price has been popular with investors today.

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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Advance NanoTek Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post ASX stock of the day: Why Advance Nanotek (ASX:ANO) shares are rocketing 7% appeared first on The Motley Fool Australia.

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