It’s an age-old question: Do you chase fast-rising stocks or go after beaten-down names? If you’re in the former camp, check out the stocks in the table below. They’ve posted stunning gains in July and investors may wonder whether yet more gains lie ahead.

As is with any list of recent hot stocks, you’ll always find a few names that have just been acquired. Both ADC Telecom (Nasdaq: ADCT) and ATC Technology (Nasdaq: ATAC) have been snapped up recently and are likely close to fully-valued unless rival bidders emerge. Let’s take a closer look at a few of the other names on this list.

Arena Pharmaceuticals (Nasdaq: ARNA)
It you were lucky enough to hitch a ride with Arena Pharmaceuticals, then it must be awfully tempting to take profits. Don’t do it. Even after more than doubling since mid-June, there may be more good news to come. As we noted in a discussion regarding Arena and its rivals, the company’s anti-obesity drug has investors salivating. That’s because the company could conceivably bag more than $1 billion in royalty revenue from marketing partner Eisai International — in a best case scenario. Even after its recent run, the company is still valued at just $600 million.

The good news may keep coming. Arena will hold a conference call with investors next Tuesday, August 3rd. As management walks through the Eisai contract in greater detail, investors may push shares yet higher. And though it’s a remote possibility, management may also announce an international marketing partner (Eisai has rights for U.S. sales only).

The real catalyst for shares will come in September, when the FDA’s advisory panel sits down to review Arena’s lorcaserin drug. In light of the drug’s relatively benign safety profile, the FDA is expected to offer up praise. But investors should note that lorcaserin seems to be only mildly effective, and the FDA sometimes rejects new drugs that don’t yield very strong benefits. As with many of the biotech stocks in the table above, these shares come with high risk — and high reward, especially after their recent run.

Power One (Nasdaq: PWER)
After years of heavily investing in Research & Development (R&D), management at Power One can finally breathe a sigh of relief. First quarter sales for this power control device maker were far ahead of even the most bullish forecasts, and shares have been on a tear ever since.

Not only were first quarter sales strong, but backlog soared from $200 million to $400 million in just one quarter. Power One is seeing robust demand in the clean energy space because its power inverters can precisely regulate electrical current flow from erratic wind flows. That surging backlog tells that sales momentum is likely to be maintained. Power One reports results tomorrow — July 29th.

#-ad_banner-#Trouble is, Power One has more recently traded yet higher on the bullish words of tele-pundit Jim Cramer. And when he gets behind a stock, it tends to move higher — but fall lower again once he stops talking about the stock. As a result, shares may be getting ahead of themselves in the near-term. And after blowing past estimates for each of the last three quarters, investors are likely expecting another blowout this time around. If results merely track forecasts, momentum investors may quickly exit the stock.

Action to Take –> Check out how Arena Pharma trades on Thursday after reports are released. Any major pullback as July winds down would set the stage for another upward move in August.

Shares look poised for further gains ahead of next week’s conference call, but be prepared to lock in gains if management’s commentary provides the stock with another sharp boost. An increasing number of investors may be looking to book profits with shares up so sharply in such a short time.