Each week I publish stocks to watch for the upcoming week as potential momentum trades or longer-term investments. The stocks below all have a 50k minimum average daily share volume and traded at a 52-week high on strong volume, with a minimum of two times relative volume on Friday, June 17th. In addition, stocks were required to close Friday higher than the open price. The full list with weekly performance is tracked on the right-hand side of Scott's Investments.
Last week only nine stocks made the cut while this week the list has expanded to 17 stocks. One highly speculative biotechnology stock caught my eye on this week's list. I have used this list more as a way to generate longer-term investment ideas, especially since very short-term momentum trading is not objective and since stocks which have risen dramatically can have a tendency to consolidate in the short-term. For example, PriceSmart (NASDAQ:PSMT) was featured in my 5/6/11 list and had volatile price action in subsequent weeks. After waiting for PSMT to form a wedge pattern last week, I initiated a long position, betting on a breakout. I like the long-term growth prospects of PSMT and technicals; however, my long position was not initiated until over a month after it appeared on my "Stocks to Watch This Week" list.
With that being said, Oncothyreon (ONTY) is an intriguing long-term biotechnology company with a parabolic chart:
The recent rise in share price is due in part to increased attention on Cancer Vaccines as revolutionary treatments for cancer. ONTY announced on May 24th that it "initiated the Phase 2 portion of its ongoing Phase 1/2 trial of PX-866 in combination with the chimeric monoclonal antibody cetuximab (Erbitux®) following successful completion of the Phase 1 dose escalation portion of the study." According to the company, "PX-866 has been shown to induce prolonged inhibition of tumor PI-3-kinase signaling, and has demonstrated anti-tumor activity both as a single agent and in combination with other agents in a number of human tumor models." While approval of the drug could be several years away, any future updates on the trial could serve as a further catalyst.
The company raised $43 million in early May via an equity offering at $4/share, which, while dilutive, provides the company with additional capital to complete current trials. The company also has Stimuvax, currently in a Phase 3 pivotal trial. According to the company, Stimuvax is "an innovative cancer vaccine designed to induce an immune response to cancer cells that express MUC1, a protein antigen widely expressed on common cancers. MUC1 is over expressed on many cancers such as lung cancer, breast cancer, prostate cancer and colorectal cancer. Stimuvax is thought to work by stimulating the body's immune system to identify and destroy cancer cells expressing MUC1."
Should Stimuvax Phase 3 trials lead to an FDA approval, the company's market value could see a dramatic increase. With a current capitalization of $336 million, the market is just beginning to price in the "potential" for clinical success. Clinical-stage bio-pharmaceutical companies are gambles: without any clinical success, the company can quickly become near-worthless. However, given that ONTY has 2 clinical stage drugs targeting diseases that afflict millions each year, it will be a stock worth watching in the coming weeks and months. Clinical stage companies can see dramatic moves based on news, so it is a highly speculative investment at this point. Given the recent meteoric rise, a short-term pullback could also be looming.
Below are the rest of this week's stocks to watch:
|Ticker||Company||Industry||6/17/11 Market Update||Market Cap||6/17/11 Relative Volume|
|AAON||AAON Inc.||General Building Materials||Here||545.6||3.68|
|ADLR||Adolor Corp.||Drug Manufacturers - Other||Here||87.75||5.55|
|BGS||B&G Foods Inc.||Processed & Packaged Goods||Here||931.18||2.22|
|CALP||Caliper Life Sciences, Inc.||Scientific & Technical Instruments||Here||407.77||3.39|
|CASY||Casey's General Stores Inc.||Grocery Stores||Here||1707.75||2.54|
|CBOU||Caribou Coffee Company, Inc.||Specialty Eateries||Here||248.78||6.96|
|ELS||Equity LifeStyle Properties, Inc.||REIT - Residential||Here||1970.04||4.33|
|GRZ||Gold Reserve Inc.||Gold||Here||177.82||4.26|
|HH||Hooper Holmes Inc.||Specialized Health Services||Here||63.67||15.63|
|HURN||Huron Consulting Group Inc.||Management Services||Here||680.65||2.39|
|JVA||Coffee Holding Co.Inc.||Processed & Packaged Goods||Here||85.59||4.22|
|PCYC||Pharmacyclics Inc.||Drug Manufacturers - Other||Here||558.01||3.06|
|PEET||Peet's Coffee & Tea Inc.||Processed & Packaged Goods||Here||688.31||2.39|
|SAAS||inContact, Inc.||Application Software||Here||153.27||2.63|
|SBH||Sally Beauty Holdings Inc.||Specialty Retail, Other||Here||3037.94||2.81|
|TDC||Teradata Corporation||Diversified Computer Systems||Here||9473.06||2.2|
Disclosure: Long PSMT