Here are the percentages of gains from April to Sept. 1:

RHHBY: 40%

QDEL: 45%

LIFE: 52%

APT: 500%

BCRX: 800%

NVAX: 745%

SVA: 850%

Disclosure: I am long RHHBY, LIFE, QDEL, BCRX and SVA.

According to a study in the June issue of Archives of Dermatology, a skin cream containing fluorouracil, a chemotherapy medicine that treats precancerous skin patches, also reduced sun damage and wrinkles on the faces of 21 people who used the drug. Researchers saw improvements over 24 weeks in dark spots, yellow skin tone and hyperpigmentation, according to the study. The fluorouracil caused the skin to become red and irritated, making it peel as it worked to eliminate unhealthy skin, study authors said.

The result was consistent with my friend's experience, who described her face as looking like raw hamburger for a few days. She was pleasantly surprised, however, by the quality of her skin after it healed.

Doctors use cream with fluorouracil, which is available as a generic and under the brand name Efudex from Valeant Pharmaceuticals International (VRX), to treat skin lesions caused by intense sun exposure. Those spots, called actinic keratoses, are considered to be precancerous. Lead study author Dana Sachs told a reporter she’s not sure if fluorouracil would reduce wrinkles in those with healthy skin and that a study is needed to answer that question. Sachs, an associate professor of dermatology at the University of Michigan in Ann Arbor, said that the study says only that it works for moderate-to-severe sun damage. That benefit also comes with a drawback, she said, emphasizing that the inflammation and irritation in the skin are necessary in order to gain the improvement. She told an interviewer, “This is a rough treatment.”

This was the first study to show that fluorouracil cream improves sun-damaged skin, which includes dark spots, hyperpigmentation and sallow complexion as well as wrinkles. I looked at the fundamentals and valuation of Valeant Pharmaceuticals, and found that it rates about a B. But that doesn't include any benefits yet from this new study. Analysts give it a price target of $27 a share, although, again, that doesn't reflect any potential boost from the study. I also saw a recent pattern of insider buying at a price close to its current price of just under $23

The two main questions that affect future sales of the cream for cosmetic purposes are whether it will work on women with healthy skin, and whether women will be willing to accept the inconvenience of a very red face for a week in order to gain the benefits. But then nearly every woman over a certain age has sustained some sun damage. That's a large group of potential users. And from my experience, with friends who are willing to undergo hours on a operating table for a facelift, or two weeks of seclusion following a chemical peel, a week or so of redness is a minor inconvenience by comparison.

It's important to note that within 10 weeks of starting the cream, 19 of 20 participants in the study said the sun damage to their skin was improved. Also, 16 of 19 said their wrinkles were improved, including 8 who called that benefit “mild.” Although 12 of 19 patients reported the treatment was uncomfortable, 17 said they would be willing to undergo the therapy again, according to the authors

Women are willing to undergo some discomfort and inconvenience for the sake of appearances. Just look at enduring popularity of spike heels.

The sudden appearance of a new strain of influenza has become a dramatic lesson in stock market dynamics. If we apply chaos theory to the market, a cough in Mexico can cause an economic storm in Asia.

Markets in Asia and Europe dropped sharply on speculation that the outbreak of swine flu will curtail travel and consumer spending. Shares of airlines and hotels were particularly hard hit, which is not surprising. The price of corn and soybeans dropped as well on speculation that an outbreak of swine flu may reduce demand for pork, and consequently the grains that feed them.

The World Health Organization called the outbreak a “public health emergency of international concern,” raising concerns of a similar outbreak to the H5N1 bird virus that spread across Asia in the past few years killing millions of poultry and several hundred people and slowing trade.

Asian money managers expressed fears that like the previous bird flu cases, this outbreak may slow international trade and disrupt government’s effort for an economic recovery.

On the other hand, shares of companies that will benefit from the outbreak have risen. The obvious ones are Roche (RHHBY), the maker of Tamiflu, and GlaxoSmithKline (GSK), which produces Relenza, the other medication used to combat flu symptoms. Basel, Switzerland-based, Roche, which said it has an ample supply of the Tamiflu treatment that can reduce swine flu symptoms, added 3.9 percent in Europe to 145 Swiss francs. Chugai Pharmaceutical Co., the Tokyo-based unit of Roche, surged 14 percent in Asia to 1,845 yen. Roche gained a similar amount in the U.S. market on Monday, while Glaxo climbed even more, up to a 7% gain. 

Similarly, shares of Biota, the small Australian company that holds the patent for Relenza, soared nearly 80% in that market.

Another company, this one based in the U.S., will also benefit, and that’s Gilead (GILD), which holds the patent for Tamiflu and will receive a percentage of Roche’s profits. It’s a much larger and more diversified company than Biota, however, and obviously won’t gain nearly as much. Other companies that will benefit include the makers of surgical masks, which would include 3M (MMM) and Kimberly Clark (KMB). Of these, Kimberly Clark would be the better choice for investors. The company maintains a Web site for preparedness in case of a pandemic.

Still another beneficiary is Quidel (QDEL), which makes rapid diagnostic kits for the flu.

More speculative stocks, which have already doubled and then pulled back a bit, include two makers of flu vaccines that are still being tested, Novavax (NVAX) and Biocryst (BCRX).

If the market holds to previous patterns, the stocks that plummeted the most will regain ground over the next few days, while those that have climbed the highest and fastest will pull back, leaving those that have made only modest or even negligible gains, like Gilead and Kimberly Clark, in the best position.

Disclosure: Long GILD