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5 Ways to Invest in the Flu

Written By Briton Ryle

Posted January 3, 2014

Have you gone for your flu shot yet? According to a new health advisory issued last week by the Centers for Disease Control and Prevention (CDC), you might do well to consider getting one.Flu Virus%2C Influenza Season%2C Grippe

A string of reports of “hospitalizations, including many requiring intensive care unit (ICU) admission, and some fatalities have been reported”, the warning explains, prompting the CDC to recommend “influenza vaccination for everyone 6 months and older. Anyone who has not yet been vaccinated this season should get an influenza vaccine now,” they urge.

And while you’re at it, you could give your investment portfolio a good shot in the arm as well.

The H1N1 Threat

Since November, the CDC has already “received a number of reports of severe respiratory illness among young and middle-aged adults, many of whom were infected with influenza A (H1N1) pdm09 (pH1N1) virus”, the agency revealed.

Influenza A is the broader species of the virus, of which H1N1 is just one of many subtypes. Composed of 18 different “H” proteins and 11 different “N” proteins, there are a total possible combination of 198 subtypes. What is more unnerving is that the influenza A family of viruses mutate much faster than influenza B and C viruses, producing some very deadly strains every now and again.

In 1918, the H1N1 subtype which originated in birds infected humans for the first time, unleashing the Spanish flu pandemic which killed an estimated 50-100 million people worldwide. Since then, the H1N1 virus has caused a small fraction of all seasonal influenza in humans every year.

Yet it is constantly changing. After infecting pigs to produce swine-H1N1, the virus reassembled itself with human-H3N2 and avian-H1N1 to produce swine-H1N2. Then in 2009, both swine H1N2 and avian H1N1 infected humans simultaneously, where they joined together to produce a new H1N1 strain which killed an estimated 17,000.

Each flu season, flu viruses claim some 36,000 deaths and hospitalize some 380,000. This year’s H1N1 strain has so far claimed 2 lives in Utah among 168 hospitalized. The Missouri Department of Health and Senior Services reported 77 deaths in Missouri last month involving pneumonia and influenza, with some 415% more flu cases this season than the five-year average. North Carolina has reported 13 flu related deaths so far this season. New York state has had 1,222 new laboratory-confirmed influenza cases last week, a 119% increase over the previous week, with 287 admitted to hospital, a 126% increase over last week. Numerous other states are similarly reporting their own H1N1-related cases.

“The spectrum of illness observed thus far in the 2013-14 season has ranged from mild to severe and is consistent with that of other influenza seasons,” the CDC puts this year’s outbreak into perspective. “Although influenza activity nationally is currently at low levels, some areas of the United States are already experiencing high activity, and influenza activity is expected to increase during the next few weeks.”

Pre- and Post-Infection Options

While antiviral drugs such as oral oseltamivir (Tamiflu) and inhaled zanamivir (Relenza) are available to treat the flu after being contracted, the CDC recommends annual influenza vaccinations for everyone 6 months and older to reduce the risk of contracting the flu in the first place.

Those most at risk of “severe disease and complications from influenza”, the CDC informs, “are children younger than 5 years of age, adults aged 65 years and older, pregnant women, and those with underlying medical conditions” – such as asthma, diabetes, heart disease, obesity, or a weakened immune system.

Yet this does not mean everyone else will be spared. The most peculiar characteristic of H1N1 is that many of its victims in past epidemics have been healthy young adults. One reason suggested for this is that these have not yet developed enough immunity as the middle-aged have, and their strong immune systems over-fight the virus, drowning the lungs with fluids and breaking down sensitive tissues.


Give Your Portfolio a Shot Too

As the annual flu season typically runs from late September to early April, we are currently in the middle part of an upswing that typically lifts pharmaceutical companies each year. As can be seen in the graph below, annual surges in this sector over the past five years have typically run from about October/November to around April/May, giving us some four or five more months to go this time around.

Drug Companies Profiting from Flu Season

 Source: To Enlarge, Click Here 

• The most striking stock in the graph above (black) is Carlisle Companies (NYSE: CSL), which has soared some 270% over the past five years, paying 1.12% in dividends annually, with a daily trading volume of some 400,000 shares.

According to Yahoo! Finance, Carlisle “operates as a diversified manufacturing company” in such diverse sectors as “commercial roofing, energy, agriculture, lawn and garden, mining and construction equipment, aerospace and electronics, dining and food delivery, and healthcare markets”. Its operation across multiple sectors explains why it has outperformed all the other pharma stocks, especially since the recession ended.

• Another good choice is Roche Holding AG (OTC: RHHBY), the parent company of F. Hoffmann-La Roche and maker of the antiviral flu drug Tamiflu mentioned above, paying 2.76% annual dividends with some 238,000 shares in daily volume.

The company “discovers, develops, and delivers diagnostic and therapeutic products and services that enable patients and healthcare professionals in the detection, prevention, diagnosis, treatment, and treatment monitoring of diseases”. (Yahoo! Finance)

• The maker of the other flu treatment drug noted above, Relenza, is GlaxoSmithKline (NYSE: GSK), offering a very nice 4.76% annual dividend, and heavily traded at some 1.75 million shares daily.

“Together with its subsidiaries,” the company “discovers, develops, manufactures, and markets pharmaceutical products … in various therapeutic areas comprising respiratory, anti-virals, central nervous system, cardiovascular and urogenital, metabolic, antibacterials, oncology and emesis, dermatology, rare diseases, immuno-inflammation, vaccines, and HIV.” (Yahoo! Finance)

• Novartis AG (NYSE: NVS) is another great choice, paying 3.08% annual dividends with heavy trading of 1.34 million shares daily.

Novartis “offers patented prescription medicines in various therapeutic areas, including oncology; primary care and established medicines; specialty care, such as ophthalmology, neuroscience, integrated hospital care, and critical care; and cardiovascular and metabolism, respiratory, and other medicines”. (Yahoo! Finance)

• Another solid performer in the space is Astrazeneca PLC (NYSE: AZN), paying 3.07% annual dividends with 1.01 million shares daily volume.

The company “engages in the discovery, development, and commercialization of prescription medicines for cardiovascular, gastrointestinal, neuroscience, infection, oncology, and respiratory and inflammation diseases worldwide”. (Yahoo! Finance)

• Finally there is Sanofi ADS (NYSE: SNY), paying 3.46% annual dividends with 3.56 million shares traded daily.

“Sanofi researches, develops, manufactures, and markets … pharmaceuticals and vaccines used by veterinarians, farmers, and pet owners; consumer health care products to treat fever, pain, and digestive health areas; and generic medicines”. (Yahoo! Finance) Remember that the H1N1 virus also exists in poultry and pigs, extending drug consumption to the thousands of chicken, turkey and hog farms throughout the U.S.

This flu season, don’t take chances with health – neither yours nor your portfolio’s. Rather than succumb to this year’s flu risks, use them to your advantage by investing in a vaccine for yourself and a pharma stock or two for your investments.

Joseph Cafariello