...And a "Mad Cow" Speculation
01/16/2004 12:00 am EST
"Even if the reported case of 'Mad Cow' in the US was the only one, there will still be many changes made to the testing and tracking of cattle in the next couple of years," says Elliott Gue in his trading-oriented service, Wall Street Winners.We caution that this idea is only for those aware of the high risks involved in low-priced speculative situations."The sheer difficulty in tracking the diseased animal's origin in December revealed many holes in the current USDA system. There are several companies that are likely to directly benefit from the changes to the current system. None of the companies in this market are likely to see any material benefit in the next quarter, but a year down the line the market is betting that there will be material positive changes to their businesses. The recent slide in cattle prices strongly suggests that spending on testing and tracking solutions will grow exponentially in the next couple of years.
"What's more interesting, trading volume in stocks related to this market have surpassed all-time highs by several-fold, which suggests that current vertical moves are only the beginning of a new trend higher. Orchid Biosciences (ORCH NASDAQ) is one such company that has a business line focused on making identity tests for animals. Buy Orchid below 2.20 with a stop loss at 1.50. We're using a small position with a loose stop, as this is a volatile stock. We caution that there's a good probability that you'll get shaken out of this trade- but from a trading standpoint, we believe the potential here is worth the risk."