5 Stocks Under $10

There's nothing wrong with low-priced stocks -- as long as they're the right low-priced stocks.

I've been singling out attractive opportunities in bargain-priced shares since my original "5 Stocks Under $10" column nine years ago. In that time, I've seen plenty of stocks with pocket-change prices generate incredible gains.

The risks involved are readily apparent, given the market's recent volatility. There are often good reasons why stocks are ignored or beaten down. However, a market rally can work wonders for unloved companies packing positive catalysts.

Let's go over my five picks from March of last year to prove my point.

*Bare Escentuals was acquired for $18.20 a share earlier this year.

The average gain of 278% in just 17 months is remarkable. Sirius XM Radio (Nasdaq: SIRI) had braced investors for the possibility of a bankruptcy filing a month earlier. Ford (NYSE: F) may have been the better-positioned stateside automaker, but no one was buying cars at the time. We're in a whole new world now, with Sirius XM gaining subscribers, and new auto sales growing nicely month after month at Ford.

With that in mind, we'll proceed to this month's picks.

Prestige Brands (NYSE: PBH) -- $7.44
This company may not be a household name, but odds are that you're familiar with -- and possibly own -- one or more of its brands. If you've ever tackled a wart with Compound W, attempted to soothe your sore throat with a blast of Chloraseptic, or battled mildew with Comet's spray gel, you know the Prestige family.

Analysts see Prestige earning $0.76 a share this fiscal year, and $0.82 a share next year, pricing the stock at a reasonable multiple in the single digits. Any customers who may have avoided premium brands in favor of store-brand knockoffs are likely to return to Prestige's portfolio of products as the economy improves.

LivePerson (Nasdaq: LPSN) -- $6.10
I singled out this promising chat software provider six months ago, but let's take another look, now that it's an official Motley Fool Rule Breakers recommendation. The stock is trading a bit lower than it was during January's mention, but it's gone on to more than double since I initially brought it up more than a year ago.

LivePerson offers its thousands of customers, including heavy hitters in tech, telco, and e-tail, a cost-effective way to reach out to website visitors. Its live online chat platform is cheaper than toll-free telephone support and more immediate than email.

LivePerson is consistently profitable, and business is looking up. Revenue climbed 27% in its latest quarter. As companies embrace the Internet and grow to appreciate LivePerson's ability to provide interactive -- and even proactive -- assistance, LivePerson's impressive Rolodex will continue to widen.

Sprint Nextel (NYSE: S) -- $4.56
Folks seem to forget that there are more than two major wireless carriers slugging it out with blue and red coverage maps.

I guess it's easy to see why Sprint is largely ignored, since its stock has been trading in the single digits for more than two years.

However, I think it has a real game changer on its hands with the HTC Evo. The country's first 4G smartphone has emerged as a legitimate contender to the iconic iPhone -- and it couldn't come at a better time, given the iPhone 4's Antennagate scandal.

Sprint Nextel's financials are a bit of a mess. It has posted wider-than-expected deficits nine quarters in a row, and the pros expect the red ink to continue in the near term. This stock represents a wager for patient investors banking on the company's 4G investments to finally pay off.

Internet Capital Group (Nasdaq: ICGE) -- $8.13
There is life after the dot-com bubble. Internet Capital Group was a poster child of the Internet boom with its portfolio of B2B investments, and a graphically painful victim of its aftermath.

Internet Capital Group is trading for essentially its book value right now, with a good chunk of that backed by cash and marketable securities. Its core consolidated companies include the more mature -- and proven -- public communication platform GovDelivery, procurement outsourcing provider ICG Commerce, and performance management specialist InvestorForce.

Janus Capital Group (NYSE: JNS) -- $9.45
Mutual fund families that specialize in growth stocks feasted during last year's rally, and Janus was no exception. Assets under management soared 40% year over year through the end of March.

Investors have assumed that the market's bleak second-quarter performance will dent Janus' performance, sending its stock down into the single digits. For value hounds, that smells like a tantalizing opportunity.

Janus is far removed from its trading improprieties scandal, and growth stocks' potential return to popularity could bode well for the fund manager. I also like how Janus has minimal exposure to bond funds relative to other balanced families. That will serve Janus well the moment interest rates begin inching higher.

Five for the road
These five stocks aren't trading in the single digits by accident. If I'm right about the catalysts, though, they may not be trading in the single digits for too much longer.

Finding promising stocks while they're still cutting their baby teeth is the core mission of the Rule Breakers newsletter for which I write. You can check it out for free this month with a 30-day trial subscription. The growth-stock research service has nearly a dozen active stock recommendations trading for less than $10 at the moment, including LivePerson. Check those out, and I'll be back with more on the third Monday of next month.