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, July 8th. 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 30 stocks made the list and this week we find 17 stocks on the list. Biotech/drug manufacturing remains a hot, speculative industry, especially among small cap companies with drugs in clinical trials. XLV (SPDR Health Care ETF) is also a top three selection in my U.S. Sector ETF Portfolio for July due to its relative strength compared to other sectors.
While I track the overall weekly performance of each list, my objective is not to purchase or recommend every stock on the list. The primary objective is to identify stocks that are either short-term trades or long-term investments. PriceSmart (PSMT) was featured in my 5/6/11 list and had volatile price action in subsequent weeks. After waiting for PriceSmart to form a wedge pattern, I initiated a long position. I like the long-term growth prospects of PriceSmart and technicals. However, my long position was not initiated until over a month after it appeared on my "Stocks to Watch This Week" list. Last week I sold out of the PriceSmart position but may look to re-enter if it consolidates after popping nicely on positive earnings. I also entered a small position last week in Antares Pharma (AIS), which was featured on last week's list.
Coffee Holding Co. Inc. (JVA)
Coffee Holding made an appearance on my list last week after closing at $17.50 and also appeared on the list in June. The stock had an incredible week last week, gaining over 52% in a week. The move has been parabolic and has been helped by the fact that the company has just a 2.78 million share float and a short float of over 12%. Thus, the parabolic move looks to be a short squeeze with improving fundamentals and earnings growth as a catalyst.
From a fundamental perspective, Coffee Holding is still a small company ($146 million market cap) with growing earnings. The company announced sales growth of 87% in its recent quarterly earnings and net income of $.22/share versus $.15/share the 3 months ending April 30th, 2010. The company has no long term debt and recently paid a quarterly dividend of $.03/share. However, after the recent meteoric rise, valuation is a concern as is the likelihood of a technical pullback:
Click to enlarge:
Chart courtesy of Finviz
Adolor appeared in one of my June lists as a potential breakout stock. Adolor Corporation, a biopharmaceutical company, engages in the discovery, development, and commercialization of prescription pain management products. The company also has various product candidates in clinical development, which include two delta opioid receptor agonist compounds, ADL5859 and ADL5747, under Phase IIa clinical trial in collaboration with Pfizer Inc. (PFE) for the treatment of pain; and two opioid receptor antagonists, ADL7445 and ADL5945, which are entering into Phase II clinical trial to treat opioid bowel dysfunction, as well as other product candidates in preclinical development for treating moderate-to-severe pain and other central nervous system conditions.
The company has been given a $5 price target by Brean Murray and also saw insider purchases in June between $1.80-$1.90. The company's net loss for the first quarter was $7.3 million and it has $39.3 million in cash and no long term debt. Net sales of ENTEREG® (alvimopan) were $7.5 million for the three months ended March 31, 2011, a 42% increase compared to net sales of $5.3 million for the three months ended March 31, 2010. In June Adolor announced that it entered into an agreement with GlaxoSmithKline (GSK) whereby Adolor will reacquire all rights to Adolor's FDA-approved product ENTEREG. The transaction is expected to close in September. Under the agreement, Adolor has agreed to pay to GSK $25M cash, staged over a six-year period, with $2.5M payable in 2011, tiered, mid-single digit royalties on annual net sales and a further one-time, sales-related milestone of $15M.
As long as the healthcare sector remains strong, Adolor is a stock to keep your eye on heading into the third quarter when clinical trial results for ADL5945 are expected.
Click to enlarge:
|Ticker||Company||7/9/11 Market Update||Industry||Market Cap||Relative Volume||Price|
|ADLR||Adolor Corp.||Here||Drug Manufacturers - Other||122.11||7.53||2.63|
|ANX||Adventrx Pharmaceuticals, Inc.||Here||Biotechnology||94.23||5.13||3.56|
|ARJ||Arch Chemicals Inc.||Here||Synthetics||1072.38||6.38||42.17|
|BPAX||BioSante Pharmaceuticals, Inc.||Here||Biotechnology||336.96||2.63||3.6|
|BUCY||Bucyrus International Inc.||Here||Farm & Construction Machinery||7493.4||3.37||92|
|CIU||iShares Barclays Intermediate Credit Bd||Here||Exchange Traded Fund||3.11||107.25|
|EXAM||ExamWorks Group, Inc.||Here||Business Services||912.83||2.81||26.39|
|GLNG||Golar LNG Ltd.||Here||Shipping||3110.6||2.23||38.98|
|GSVC||GSV Capital Corp||Here||Closed-End Fund - Equity||54.11||8.22||16.2|
|HNSN||Hansen Medical, Inc.||Here||Medical Appliances & Equipment||250.38||4.26||4.59|
|JVA||Coffee Holding Co.Inc.||Here||Processed & Packaged Goods||146.86||5.3||26.75|
|MLI||Mueller Industries Inc.||Here||Metal Fabrication||1641.23||3.15||43.35|
|PCYC||Pharmacyclics Inc.||Here||Drug Manufacturers - Other||695.4||2.69||11.54|
|REV||Revlon, Inc.||Here||Personal Products||977.85||2.29||18.74|
|SPNC||The Spectranetics Corporation||Here||Medical Appliances & Equipment||224.38||4.19||6.73|
|WDFC||WD-40 Company||Here||Specialty Chemicals||751.31||5.26||44.43|
|XPO||Express-1 Expedited Solutions Inc||Here||Trucking||124.78||6.19||3.78|
Disclosure: Long AIS. May initiate positions at any time in the future in the stocks mentioned in this article.