Mad Cow-Related Stocks Jump

The U.S. Department of Agriculture quarantined a third herd of cattle on Wednesday, triggering another rally in stocks related to mad cow disease.

As the USDA widens its investigation into the case of mad cow disease that first appeared on Dec. 23, it has been changing the industry's meat-handling procedures, working to test meat for pathogens and laying plans for an electronic livestock-tracking system. As a result, investor interest in companies that produce solutions that the government could employ has been extremely high.

On Wednesday, the USDA news triggered buying in some mad cow-related names, most notably EMerge Interactive (EMRG Quote), a technology firm based in Sebastian, Fla. Shares of the company rose 50 cents, or 16.4%, to $3.54 on volume of 11 million shares.

Interest in EMerge has been rising since the company's announcement a week ago that CattleLog, its electronic animal-tracking system, had been certified by the USDA. The company has traded more than 1 million shares in every trading session since the outbreak, and in the last week has seen its average daily volume jump to 1.7 million from 680,000.

But without a signed government contract to provide goods and services, investments in these small, largely uncovered companies are speculative and subject to bouts of volatility. After jumping to $3.67 on news of the UDSA certification of its tracking system last Wednesday, EMerge shares have been falling consistently, dropping 17.1% to $3.04 until Wednesday's rally.

Other companies were also on the rise as a result of the news, such as Orchard Biosciences (ORCH Quote), which has expertise combating scrapie, a chronic wasting disease in sheep that is similar to mad cow, and recently announced plans to develop an array of tests for meat. The company's shares rose 13 cents, or 7.6%, to $1.85.