Trading The Swine Flu

| April 29, 2009 | 0 Comments

Did you know the swine flu was genetically engineered?  It’s a top-secret biological weapon leaked by the government.

This is the latest conspiracy theory making the rounds on the Web.

Apparently two mainstream journalists interviewed a top scientist for the United Nations who examined the swine flu virus (H1N1).  The scientist supposedly concluded H1N1 was genetically manufactured as a military biological warfare weapon.  The report stops short of specifically accusing the military of releasing the virus intentionally (but the implication is hard to miss).

Regardless of how it started, the swine flu is getting more dangerous by the minute.

The first swine flu death occurring on U.S. soil was reported this morning. A 23 month old boy from Mexico died in a Houston hospital Monday evening.

Over 2,400 people are infected with the virus in Mexico, where the outbreak began.  And, more than 150 people have died there from the virulent strain.

The CDC reports 91 confirmed cases of swine flu in 10 U.S. states.  They expect more cases, more hospitalizations, and more deaths in the coming days and weeks.

This is starting to get scary…

Cases have also appeared in Canada, Britain, Germany, Spain, Israel, Austria, and New Zealand.  As I write, the World Health Organization is holding an emergency meeting in Geneva.  They’re deciding whether to raise the pandemic alert level.  (That could send the world into full blown panic mode!)

My heart goes out to all the patients and their families.  And, I extend my sympathies to the families who’ve lost loved ones.

I don’t wish to appear insensitive, but I want to share a few trading ideas presented by the swine flu situation.

One idea is to invest in the manufacturers of surgical masks.  The Mexican government is requiring its citizens to wear them when they are out in public.  Other governments around the world could require the same thing if the virus continues to spread.  Major manufacturers of surgical masks are 3M (MMM) and Kimberly Clark (KMB).

Another strategy is to buy shares of the pharmaceutical companies that make the anti-viral drugs.

Tamiflu is sold by Roche Pharmaceuticals (RHHBY).  And, Gilead Sciences (GILD) receives a 20% royalty of worldwide sales.  The U.S. government has already released 12.5 million doses of Tamiflu from its stockpile.  Other countries are likely to follow suit.  Expect sales to rise as government stockpiles are replenished.  And, if a global pandemic outbreak occurs, global sales of Tamiflu will surge.

GlaxoSmithKline (GSK) makes the other effective anti-viral drug, Relenza.  Sales could skyrocket as fears over swine flu grow.

A third strategy is to buy stock in the vaccine manufacturers.  This is a bit trickier as at least 20 companies make flu vaccines.

It looks like Astra Zeneca (AZN) and Novartis (NVS) have the inside track.  The CDC has reportedly shipped raw samples of H1N1 to AZN’s subsidiary, MedImmune, which sells the only flu vaccine administered by nasal spray.  The spray would enable faster mass inoculations.  Novartis announced it also received the genetic code for the new virus.

Another potential winner is Baxter International (BAX).  The specialty drug maker has patented technology for making vaccines in half the time it usually takes (13 weeks instead of 26).  The company has contacted the World Health Organization for a sample of the strain.

Dutch biopharmaceutical firm, Crucell (CRXL) is the largest independent vaccine producer in the world.  They use a patented technology to develop vaccines from a single human cell which can replicate itself indefinitely.  The technology allows them to mass produce vaccines very quickly.  A huge competitive advantage in a pandemic scenario.

Finally, a speculative play.

Novavax (NVAX) is working on an experimental vaccine against one strain of avian flu.  The compound has shown a strong immune response in humans.  The company also claims its technology can cut production time in half.  This one’s not for the faint of heart.  The stock has more than quadrupled since the swine flu story broke.

If this turns into a full blown pandemic, these stocks could really move. Aggressive traders should consider taking a position quickly.

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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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