Even as we look to post 10% to 15% annual gains for our portfolios, the occasional 50% gainer never hurts. So I like to look at the market’s biggest winners to see what’s working right now. Some of these big gainers may even have more room to run.

Here’s a look at the top 10 performing small caps (in the Russell 2000) in the past month. Almost all of them are in the biotech industry, which highlights the extreme risk and reward available for these speculative stocks. A month from now, some of these names will be higher still, while some will come crashing back.

Let’s take a closer look:



InterMune (Nasdaq: ITMN)
Biotech investors like to find a drug that may end up having a market all to itself, and they just found it in InterMune, which received tacit regulatory approval to market Esbriet, its pulmonary fibrosis drug, across Europe. (Formal approval is not expected until later this winter.) Analysts think InterMune now faces a potential $800 million to $1 billion annual revenue opportunity. Word of the European nod led shares to more than double last Friday, and they’re now up more than 150% during the past month.

#-ad_banner-#Earlier this year, shares were tossed in the biotech waste bin after the Food and Drug Administration (FDA) gave InterMune the thumbs down on the drug. That will force the company to conduct further tests before it can go before the FDA again. Before that happens, InterMune may be scooped up: firms like Bristol-Myers Squibb (NYSE: BMY) and Novartis (NYSE: NVS) are said to possibly be interested in buying InterMune. “Very few newly approved billion dollar drugs with unencumbered rights are available to pharmaceutical and biotech companies hungry for acquisitions,” wrote analyst Alex To, of Cross Current Research.

Despite the big move in the stock, it’s not too late to capture further gains, according to analysts. Robert W. Baird figures shares will move from a current $35 to $47, a 35% gain, based on his forecast of sales and profit trends by 2016. Cross Current’s Alex To suggests the net present value (NPV) of InterMune’s profit streams might be around $4 billion. He thinks shares might fetch $50 or more in a buyout offer. The only real risk of a pullback here would be if the European regulators somehow had a last-minute change of heart before granting final approval. That’s quite unlikely, but a key risk nevertheless.

NuPathe (Nasdaq: PATH)
This biotech firm focusing on treatments for central nervous system (CNS) disorders pulled off an early August IPO at $10 and eventually went on to lose nearly half of its value. But since hitting $5.23 about a month ago, it’s been all uphill since then, good for a one-month gain of nearly 70%.

Why the rebound? Because investors increasingly think the company’s Zelrix patch, which reduces the symptoms of migraine headaches for many patients within two hours, has a good shot at FDA approval, especially as recent tests have shown clear efficacy and few side effects. (NuPathe is also working on drugs that treat Parkinson’s Disease and schizophrenia, but they are too early in the testing process to carry much value.)

NuPathe benefits from the fact that other migraine treatments can be hard to tolerate, as migraine sufferers often get quite nauseous. NuPathe’s topical patch has eliminated that concern.

Migraine treatment is a pretty big market: there are an estimated 28 million sufferers in the United States alone. Current treatments represent a $1.5 billion annual market, so the question is whether NuPathe can capture a meaningful portion of it.

If everything goes according to plan, Zelrix may get FDA approval about a year from now and hit the market in the first half of 2012. There’s no such thing as a sure thing in biotech, but Zelrix looks pretty solid: NuPathe released the results of its Phase III clinical trial, which studied 530 patients, and the results looked quite positive.

So if Zelrix gets approved, what’s the stock worth? Needham figures NuPathe could generate almost $250 million in annual sales by 2017, and by discounting results back to the present, he thinks shares are worth $12, or 40% above current levels. Much can happen to alter that target. NuPathe can bring in a marketing partner to help shoulder the cost of the product launch, or it can sell itself outright. That could push shares closer to the $15 mark. If NuPathe goes it alone and needs to raise fresh capital for the marketing launch, Needham’s target is likely more accurate.

McClatchy (NYSE: MNI)
If you ran a struggling newspaper chain during the past few years, all you could do is cut costs and hope business gets better. This Pittsburgh, PA-based media firm might just get that plan right. Management has cut costs by 18% during the past two years, nearly matching a 19% drop in sales. That belt-tightening approach could soon payoff. McClatchy’s sales are no longer falling like a stone, and the year-over-year revenue comparisons, though still negative, are clearly on the mend. If current trends persist, McClatchy may again see its top line grow sometime in 2011. That led S&P to boost its rating on the company’s debt to “B-.”

Shares have rebounded smartly in recent weeks, and more gains may be in the offing. The company is looking to sell a valuable tract of land in downtown Miami (not an easy task in this market), and also has stakes in CareerBuilder.com and in a promising digital media firm known as Classified Ventures. Although McClatchy still carries a lot of debt, almost all of it comes due in 2014 or later. If the economy materially improves and traditional newspaper advertising stabilizes, then shares could continue to move higher.

Action to Take –> These three firms all have upside even after a remarkable run. In the case of McClatchy and NuPathe, shares may see some profit-taking by short-term investors. You may get a better entry point by being patient. InterMune is unlikely to slip from current levels, except in the rare event that the European regulators change their mind.