Losing Money in Swine Flu Penny Stocks

At Peter Leeds Penny Stock we took a look into 10 penny stocks whose revenues may increase due to the rise of Swine Flu.

We had some startling findings, including that we expect 9 out of the 10 to drop pretty significantly in price.  The other one is pretty fundamentally and financially strong, with some upside potential, and may be able to avoid the coming "Swine Flu Drop-Off."

The companies were GMED, INSM, VICL, SIGA, PURE, DVAX, NVAX, SVA, HGSI, and HEB.

DVAX should do well with or without the Swine Flu effect, because it's a solid company with strong upside.  We can't say the same for the other penny stocks we researched. 

Here is their problem with the nine companies we mentioned:

As Swine Flu spread, investors bought into these companies very aggressively.  This resulted in share prices increasing dramatically.  For example, consider NVAX which went from $0.80 per share to $3.88 in a couple of days.

Unless you get in at the very start, you'll wind up significantly over-paying.  Just take a look at the 60% collapse in NVAX immediately following it's big rise. 

There is an unfortunate truth about life cycles of buying stampedes, and that is most traders involved with it will end up losing.

I understand the logic of the traders.  Swine Flu is running rampant, and people will need the help of the penny stock companies listed above. 

Unfortunately, if you buy shares worth $0.50 cents, but you pay $2 per share, you'd better hope for a bigger pandemic than world has ever known.  Otherwise, you're investment will come back down to earth.  Of course, the fact that millions don't die from Swine Flu should provide you with some consolation.

Our selection, Dynavax (DVAX), was chosen based on their proven management team, improving financial situation, and strong fundamentals.  The share price increase that DVAX enjoyed from speculation into infectious disease companies is welcome, but not a reason to invest on it's own.