Several weeks ago I

wrote about a couple of companies,

Cepheid

(CPHD)

and

Bruker Daltonics

( BDAL). At the time, I believed they would be good bets because they both make equipment that can be used to detect and identify contaminants and biological agents involved with bioterrorism attacks.

Well, with all the worries over the outbreak of anthrax, the two companies have seen their share prices surge. How much? If you had bought shares in either company in late September, you would have either made a whopping return of 235% on Cepheid or 84% with Bruker Daltonics. Hence, based solely on valuation, I would pocket the profits.

Like everyone else, I wish Sept. 11 had never happened and terrorism would just go away, but unfortunately, it won't. And I also realize that we will have to cope and deal with terrorism as a part of our daily lives. If that is the case, you can argue that Cepheid and Bruker Daltonics would be buy-and-hold candidates, but I think that strategy would be unwise.

That's because both Bruker Daltonics and Cepheid have become trading vehicles, especially Cepheid. It seems each time news is released about a new case of anthrax, Cepheid's stock picks up. Take, for instance, last week when Cepheid traded as high as $11.48 and as low as $3.59 after the first cases of anthrax were reported. Monday, the stock closed at $8.06, and Cepheid is trading with volumes rocketing to more than 24 million shares, more than 12 times the issue's average daily volume.

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The company has not made any announcements the past couple of weeks, so it's safe to assume these trades point to heavy participation from speculative traders as they snapped up shares on panic about a potential outbreak of anthrax. No doubt, the spike in price has encouraged momentum traders and daytraders to jump in and play the stock on a short-term basis.

While Cepheid's shares will likely continue to benefit from fears of biological warfare, the short-term traders will be taking profits on the run-up, causing some pullback.

In addition, Cepheid plans to report third-quarter earnings Oct. 23, and if the company doesn't measure up to investors' expectations, or the number of reported cases of anthrax starts to taper off, watch out below.

At least Bruker Daltonics is earning money, and similar to Cepheid, its share price has been driven by news about exposures to anthrax. Since the Sept. 11 attack, neither company has made any public release of new agreements to use their technology relating to biological warfare.

Therefore, I believe it's time to get off the bandwagon, despite the fact that bioterrorism stocks are so tempting because each new report of anthrax exposure causes them to rise, as compared with most other sectors where stocks continue to skid.

Sure, they may be hot for now, but who knows how long that will last? They may well go down just as fast as they went up.

Nadine Wong is the editor, publisher and co-founder of the

BioTech Sage Report

and a biotech columnist for

worldlyinvestor.com

. At the time of publication, Wong had no position in any of the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While she cannot provide investment advice or recommendations, Wong invites you to send comments on her column to

Nadine Wong.

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