Catch The Rally In Swine Flu Stocks

| September 3, 2009 | 0 Comments

The swine flu, or H1N1 virus, is making headlines again.  With kids heading back to school, health officials are worried about another outbreak.

H1N1 first appeared last April in Mexico.  Since then, it’s grown into a full blown global pandemic.

The World Health Organization (WHO) says H1N1 has spread to 170 countries… over 200,000 people have become infected… and, at least 2,185 people have died from the virus.

Health officials were hoping the virus would fade away during the summer.  Most viruses tend to do just that.  But, H1N1 is proving to be remarkably resilient.  It not only survived the summer, it continued spreading around the world.

Now, it looks like H1N1 is gearing up for a potentially huge second wave.

The WHO is warning that the number of H1N1 cases worldwide are about to explode.   They predict most countries will see a doubling of cases every three to four days until peak transmission levels are reached.

Not to be outdone, the Obama administration just made its own dire predictions for H1N1.

They said half of all Americans could eventually become infected with the virus.  Some 1.8 million could need hospitalization.  And, deaths from H1N1 could number 30,000 to 90,000 people (about double the number of deaths from seasonal flu).

So far, H1N1 has been relatively mild.

Most people who get infected have regular flu-like symptoms and eventually recover.  However, severe complications and deaths have occurred in pregnant women, young children, and people with underlying health conditions.

While the death toll has been low so far, many disease experts are concerned H1N1 could eventually mutate into a deadlier strain. And, given the speed at which the virus spreads, a deadlier strain could cause mass devastation.

The focus right now is on producing vaccines to immunize the public against H1N1.  A vaccine is expected to be widely available in the U.S. by mid-October.

Back in April, I recommended several stocks that I believed would benefit from the fight against H1N1.  (Read The Swine Flu – A Secret Bio-Weapon? for the details.)

I don’t mean to brag, but you’d have made good money following my recommendations.

Surgical mask makers 3M (MMM) and Kimberly Clark (KMB) are up 23% and 17% respectively.

Makers of the anti-viral drug, Tamiflu, are seeing mixed performance.  Gilead Sciences (GILD) is down 4%, while partner Roche Holdings (RHBBY) is up 24%.  GlaxoSmithKline (GSK), the maker of anti-viral drug, Relenza, has jumped 27%.

The big vaccine makers are outperforming across the board.  Astra Zeneca (AZN) is up 26%, Novartis (NVS) is up 22%, and Baxter International (BAX) is up 19%.

But, the big winner was tiny penny stock, Novavax (NVAX).

NVAX is up a whopping 119%!

They’re developing a three-in-one vaccine against swine flu, Hong Kong flu, and a strain of influenza B.  Results from a recent mid-stage clinical trial show the vaccine is effective without any serious side effects.

All of the stocks mentioned above are strongly outperforming the market since I recommended them.  The Dow Jones Industrials and the S&P 500 are both up just slightly more than 13% over the same time period.

Here’s what I see going forward.

For the larger drug companies, revenue from H1N1 vaccines will be a drop in the bucket.  They’re already selling many drugs and other health care products.

The big money is going to be made in the smaller, more speculative companies like NVAX.  Here are a few other small company stocks likely to benefit from H1N1.

Alpha Pro Tech (APT) is tripling production of its respirator masks for the flu season.  They’re expecting a surge in demand due to H1N1.

Sinovac Biotech (SVA) just received approval from the Chinese government to produce its H1N1 vaccine.  The company expects to begin production next week.

Finally, a truly speculative play is Inovio Biomedical (INO).

They’re using DNA to develop a universal vaccine that works against all flu strains.  Now, INO is nowhere close to having a product ready for this flu season.  But, the stock could rocket higher in a broad swine flu rally.

I expect all of these stocks to continue outperforming the market. And, any news about H1N1 spreading or becoming more deadly should certainly cause these stocks to jump.  Take a look at a few of these for your own portfolio.

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Category: Stocks

About the Author ()

Robert Morris is the editor of Penny Stock All-Stars, an investment advisory focused on discovering small-cap and micro-cap stocks that are destined to become the market’s next Blue Chips. The Wall Street veteran and small-cap stock specialist is also a regular contributor to Penny Stock Research. Every week, Robert shares his thoughts with our readers on a variety of penny stock-related topics. In addition to Penny Stock Research, Robert also writes frequently for two other free financial e-letters, ETF Trading Research and the Dynamic Wealth Report. He’s also the editor of two highly successful and popular investment advisories, Biotech SuperTrader and China Stock Insider.

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