Medical experts fear that the current flu season could be one of the worst in history. Hospitalizations are already well above average, with California victims being hospitalized at four times 2014 levels.

To make matters worse, the CDC is estimating that flu vaccines available may only be about 30% effective to the strain this year compared to an average effectiveness of 45% over the last decade.

Top it off with the recent announcement that the CDC is planning to cut up to 80% of its epidemic prevention activities around the globe and this could just be the start of widespread health outbreaks that threaten the United States.

#-ad_banner-#Even if you can’t protect yourself from getting the flu this year, you can protect your portfolio with companies that stand to benefit from heightened risk of pandemic contagions.

Besides the potential to beat expectations for the fourth quarter of last year and first-quarter results this year, these companies could see higher sales in the future if slashed funding for disease prevention fails to stop more outbreaks.

Why This Year’s Flu Is One Of The Worst In History
The CDC reports the flu is now widespread in 46 states, making the 2017-2018 flu season uncharacteristically more pervasive than other years. Doctor Dan Jernigan, Director of the Influenza Division at the CDC, told Time magazine last month that, “This is the first year we had the entire continental U.S. be the same color on the [flu activity tracking map], meaning there’s widespread activity in all the continental U.S. at this point.”

That means there’s more opportunity for the different strains of the flu to spread, mutate and resist prevention methods. The CDC upgraded the current flu season to “epidemic” in January.

Combine the nationwide spread of the flu with the fact that the primary strain being reported, H3N2, is thought to be more lethal than the swine flu of 2009, and many medical experts are saying this season could set records for mortality and hospitalizations.

Reported cases in Arizona are up more than 758% as of the first week of January compared with the same time last year, and hospitalizations could surpass the 710,000 recorded in 2014.

The evidence points to a peak in the flu season through February or even March. Most flu seasons peak in February, according to three decades of data reported by the CDC, but this season looks to be especially long-lived and resistant to prevention attempts.

How To Profit From The Super-Flu
Researchers at the CDC found in a 2007 study that more than $10 billion is spent annually treating patients for the flu, with 3.1 million hospital days equivalent and over 31.4 million outpatient visits. That amounts to an annual economic burden of $87.1 billion with this year sure to beat that average.

The heightened activity could boost shares of clinics like CVS Health Corp (NYSE: CVS) and Walgreens Boots Alliance (Nasdaq: WBA) through sales of vaccines, services, and other remedies.

CVS has used its massive retail pharmacy footprint to expand across healthcare and services. The company is one of the largest pharmacy benefits managers (PBMs), processing more than 1.3 billion claims annually, and has reached an agreement to acquire Aetna to expand into health insurance. This gives it unrivaled power to negotiate prices and keep customers within its ecosystem of services.

Shares of CVS trade for just 13.4 times trailing earnings against a five-year average of 19.9 times and an industry average of 21 times earnings. Earnings are expected to be higher by 11% in 2018 at $6.53 per share. The company reported a tax rate of 38% in fiscal 2016 on a U.S.-centered business model and should benefit greatly from the drop in corporate tax rates.

Along with a solid 2.5% dividend, the company returned $4.8 billion to shareholders through a repurchase program over the last twelve months for a combined 8.5% yield.

While vaccines are not thought to be as effective this year, the severity of the season could drive higher volume for drug makers. Experts have said the AstraZeneca (NYSE: AZN) vaccine FluMist may not be effective against this year’s strain of flu and are instead recommending the Sanofi (NYSE: SNY) FluZone vaccine. GlaxoSmithKline (NYSE: GSK) has recently been approved for use of its FluLaval vaccine in children as young as six months.

Sanofi has one of the strongest late-stage pipelines in the industry with potential blockbusters in the treatment of multiple sclerosis. The company launched its immunology drug Dupixent last March and could reach $3 billion peak sales for the product.

Sanofi has avoided the debt leverage problem seen at so many other pharmaceutical companies. A strong record of internal development and a disciplined acquisition strategy have led to a debt-to-equity ratio of just 0.2 times and EBITDA covers interest expenses 33 times over.

Risks To Consider: The flu season reached its peak in the fourth quarter and is likely to only provide a benefit through the first quarter. However, future flu seasons and viral outbreaks could be just as bad due to reduced prevention programs at the CDC.

Action To Take: Position in companies that could see a boost in sales on the historic flu season, both through proactive vaccination and reactive health services. But look to their underlying fundamentals and growth prospects for longer-term success.

Editor’s Note: Sustainable energy is not cheap. In fact, it’s the most expensive component in an electric car. But Tesla founder Elon Musk is determined not only to make it affordable worldwide… but to also get even wealthier from this “sunshine in a box” technology as it applies to your home. Folks who get in on this huge $1.3 trillion opportunity have the potential to profit 10X over… Full details here…