Trending Stocks to Watch This Week

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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 3 selection in my US 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 PSMT to form a wedge pattern, I initiated a long position. 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. Last week I sold out of the PSMT 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 AIS, which was featured on last week's list.

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Coffee Holding Co. Inc. (JVA)

JVA 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, JVA 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:

Chart courtesy of Finviz

Adolor (ADLR)

ADLR 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. 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 they have $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 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, ADLR is a stock to keep your eye on heading into the third quarter when clinical trial results for ADL5945 are expected.

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.

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