One Flu Over The Penny Stock

Who knew you could put Paris Hilton and Vice President Biden on the same intellectual plain? It seems the swine flu has lots of people confused. When asked about swine flu in an online video, the ever saavy Ms. Hilton chirped, “I don’t eat that.”

Others have vowed to stop eating pork. Some, worried about germs spreading in confined spaces and won't fly — anywhere. Or they think petting zoos and farm visits are off limits.

Vice President Joe Biden said last Thursday that he advised his family not to fly. The federal Centers for Disease Control and Prevention advises against going to Mexico, the country hardest hit by swine flu. But they aren't telling healthy people to avoid all air travel.

Misinformation isn’t just ripe when it comes to swine flu banter…it also trickles down to the stock market; and affects large cap and penny stock investors looking to make a quick buck.

Swine and bird flu stocks were mixed earlier last week after surging 22% on Monday, April 27. On Monday vaccine stocks soared as media outlets rolled out terms such as “pandemic”.

Any name thought to be associated with an antiviral solution was bid higher as some penny stock traders feared missing out on the rally. Stocks not even associated with a potential swine flu vaccine enjoyed the short-term ride.

After some time to digest the information, traders began dumping some of their more speculative positions. A significant portion of the sector is giving back a portion of its gains, but a few companies are still hanging on or advancing.

As a penny stock investor I tend to be skeptical about knee-jerk reactions to the latest crisis. Not that I’m a buy and hold kind of penny stock investor…but I certainly don’t invest with reckless abandon when the issue du jour hits the airwaves.

There's no question that individual penny stocks and sectors can be impacted in the short term: the initial market reaction saw front line aviation stocks fall and pharmaceutical stocks rise. Secondary stocks were also impacted; those stocks that make hand cleanser and respiratory masks for example.

While the fears of swine flu pandemics raised undue alarm on the stock markets, those looking to make a quick profit also had the opportunity to stumble across a number of excellent penny stocks they may never have normally found.

GenVec, Inc. (GNVX – Nasdaq) is a clinical-stage biopharmaceutical firm biopharmaceutical firm that develops gene-based drugs and vaccines for everything from cancer to HIV. Its lead candidate, TNFerade, may boost the effectiveness of chemotherapy used to treat pancreatic and other types of cancer.

In mid-March, the company announced that revenue for fiscal 2008 climbed 8% year-over-year to $15.1 million. During fiscal 2008 GNVC announced encouraging top-line results of an interim analysis from its Phase III Pancreatic Cancer Clinical Trial (PACT). The company also announced that the U.S. Department of Homeland Security executed the second option period to support the development of vaccines for the prevention of foot-and-mouth disease.

The National Institute of Allergy and Infectious Disease also executed its second option period under a previously announced, five-year contract with GenVec valued at up to $52 million for the production of HIV vaccines.

Alpha Pro Tech Ltd. (APT – AMEX) makes protective apparel and related products used in hospitals, nursing homes, and dentists' offices. Products include disposable gowns, lab coats, face masks and eye shields to control infections.

In mid-March, APT announced that consolidated sales for the 2008 fourth quarter increased 14.8% to $9.1 million. Net income for the quarter came in at $162,000, or $0.02 per diluted share.

On April 28, the company astutely announced that it has a supply of N-95 respiratory masks and is capable of accelerating production to meet the increased demand amidst concerns regarding the Swine flu outbreak.

While I don’t recommend penny stock investors try and get in on all the marketing noise - unfortunate events such as the swine flu do present investors with the opportunity to delve into sectors they may not have previously considered.