MILLBURN, N.J. ( Stockpickr) -- It's that time of year again: time to prepare for cold and flu season.

The Center for Disease Control recommends that everyone six months and older get the influenza vaccine. Of course, you will want to check with your own physician as there may be some side effects and risks. I have already been vaccinated.

Investors can prepare for things in another way: with stocks. With that in mind, I've compiled a portfolio of stocks to take advantage of the impending cold and flu season.

Traditional Vaccines

Sanofi -Avenits ( SNY), through its Sanofi Pasteur subsidiary, GlaxoSMithKline ( GSK) and Novartis ( NVS) all manufacture influenza vaccines. For the 2010-2011 flu season, a total of 140 million doses are initially planned for shipment by these three companies: 70 million from Sanofi-Aventis; 30 million from GlaxoSmithKline and 40 million from Novartis.

Please note that all three of these companies are headquartered outside of the U.S.. Sanofi-Aventis is French, GlaxoSmithKline is British, and Novartis is Swiss. This may have certain tax implications upon the payment of dividends for which you should consult your tax advisor.

>>Who Owns Sanofi-Aventis?: Warren Buffett

Here is a quick comparison of all three of these pharmaceutical companies:

As is the case with large pharmaceutical companies, the research and development expenditures for the future drug pipeline is a huge drain on cash. Furthermore, the companies still face the uncertainty of the approval process, especially from the U.S. Food & Drug Administration. Each of these three companies is so large that I would expect them all to be acquirers in order to grow in the future. In fact, Sanofi-Aventis is currently engaged in a protracted hostile takeover of Genzyme ( GENZ).

On a yield basis, GlaxoSmithKline is the most preferable company. In terms of earnings potential and R&D capability, I prefer Novartis.

>>Also: 10 Pharma Stocks With Upside

The impact of influenza vaccine sales on the top and bottom line is quite small for these companies. However, the vaccines remain important products as part of their distribution channels and relationships with doctors and medical facilities.

Flu Mists

An interesting addition to treatment of influenza that has come to market within the last decade is inhaled vaccines. MedImmune, a wholly owned subsidiary of AstraZeneca ( AZN), another British pharmaceutical company, makes FluMist. GlaxoSmithKlike also has an inhaled influenza treatment, marketed under the name of Relenza.

>>Who Owns AstraZeneca?: Charles Brandes

Unfortunately, the sales of inhaled influenza treatments have so far been disappointments compared with manufacturer and market expectations. The efficacy of these products is still the subject of debate in the medical field and pharmaceutical industry.

Given a choice between these two manufacturers of inhaled influenza treatments, I would prefer to stick to GlaxoSmithKline, which has a higher yield (AstraZeneca's yield is only 2.80%) and a better portfolio of products.

>>Also: 4 Safest Health Care Stocks

Oral Flu Treatments

Tamiflu, generic name is oseltamivir, is an oral influenza treatment, administered in liquid or capsule form. Tamiflu is sold by Roche Holdings (RHHBY: Pink Sheets), and developer Gilead Sciences ( GILD) receives a royalty of about 20% on all Tamiflu sales. Tamiflu is by far the largest-selling noninjectible form of influenza treatment.

Gilead as a biotechnology company is far less dependent on its existing portfolio of drugs and is growing from the development of new treatments. The company's growth rate is at least 10% but does not pay a dividend. Of all the companies mentioned in my flu stocks portfolio, Gilead has the best growth prospects.


Doors handles, computer keyboards, pillows, toilets, sinks -- they're all huge breeding grounds for germs, including influenza. There are two widely known brands that are used around the home as disinfectants.

The first is Lysol, which is manufactured by another British company, Reckitt Benckiser, which is not publically traded in the U.S. The only way that you can obtain exposure to Reckitt Benckiser is through owning shares in the iShares United Kingdom ETF ( EWU). The combined exposure of Reckitt Benckiser, GlaxoSmithKline and AstraZeneca in the EWU ETF is about 9.1%, with Reckitt Benckiser contributing only about 1.5%. By the way, this ETF has a dividend of about 2.8%

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The second most-recognized brand of disinfectant is Clorox ( CLX). Clorox is a consumer products company best-known for its cleaning and disinfecting products. In addition, the company has jumped into the market for environmentally friendly products with its Green Works line of laundry and home-cleaning products.

Clorox is based in the U.S., has a market capitalization of about $8.7 billion and yields about 3.5%. Recently, Clorox reported a very disappointing third quarter, missing consensus estimated by 5 cents. In turn, Clorox stock dropped dramatically and trades about 9% below its 52-week high and at levels not seen at since July. However, the stock appears to be finding some support at these levels and could offer a good entry point for traders or those seeking to capture a nice dividend.

>>Also: Top-Rated Household Product Stocks

Hand Sanitizer

Purell hand sanitizer is gaining acceptance not only by consumers for home use but by medical facilities, restaurants, book stores and other public places. Purell is a division of Johnson & Johnson ( JNJ), the $180 billion market capitalization health care and consumer products company. Besides Purell, J&J produces a wide variety of consumer products, including Band-Aid, Tylenol, Splenda, Neutrogena and Pepsid. The company is also one of the largest manufacturers of pharmaceuticals and medical devices in the world.

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More than any of the other pharmaceutical companies in my cold and flu portfolio, J&J has the most diverse portfolio of products. The company pays a dividend of about 3.4%. Unfortunately, the stock has been pretty much stuck in a trading range of $55 to $65 for the better part of the last decade. Eventually, J&J will break out of that range. That day may come soon.


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At the time of publication, author had no positions in stocks mentioned.

Scott Rothbort has over 25 years of experience in the financial services industry. He is the Founder and President of LakeView Asset Management, a registered investment advisor specializing in customized separate account management for high net worth individuals. In addition, he is the founder of, an educational social networking site; and, publisher of The LakeView Restaurant & Food Chain Report. Rothbort is also a Term Professor of Finance at Seton Hall University's Stillman School of Business, where he teaches courses in finance and economics. He is the Chief Market Strategist for The Stillman School of Business and the co-supervisor of the Center for Securities Trading and Analysis.

Mr. Rothbort is a regular contributor to's RealMoney Silver website and has frequently appeared as a professional guest on Bloomberg Radio, Bloomberg Television, Fox Business Network, CNBC Television, TV and local television. As an expert in the field of derivatives and exchange-traded funds (ETFs), he frequently speaks at industry conferences. He is an ETF advisory board member for the Information Management Network, a global organizer of institutional finance and investment conferences. In addition, he is widely quoted in interviews in the printed press and on the internet.

Mr. Rothbort founded LakeView Asset Management in 2002. Prior to that, since 1991, he worked at Merrill Lynch, where he held a wide variety of senior-level management positions, including Business Director for the Global Equity Derivative Department, Global Director for Equity Swaps Trading and Risk Management, and Director for secured funding and collateral management for the Global Capital Markets Group and Corporate Treasury. Prior to working at Merrill Lynch, within the financial services industry, he worked for County Nat West Securities and Morgan Stanley, where he had international assignments in Tokyo, Hong Kong and London. He began his career working at Price Waterhouse from 1982 to 1984.

Mr. Rothbort received an M.B.A., majoring in Finance and International Business from the Stern School of Business, New York University, in 1992, and a B.Sc. in Economics, majoring in Accounting, from the Wharton School of Business, University of Pennsylvania, in 1982. He is also a graduate of the prestigious Stuyvesant High School in New York City. Mr. Rothbort is married to Layni Horowitz Rothbort, a real estate attorney, and together they have five children.