5 Stocks Under $10 Worth Buying

If you've got 10 bucks, then I have some stock ideas for you.

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

There are risks, and they are readily apparent given the recent volatility. There are often good reasons for stocks to be ignored or beaten down. However, a market rally can work wonders for the unloved with positive catalysts in their pockets.

Let's go over my five picks from March 2009 -- when low-priced stocks bottomed out -- to prove my point.

*Bare Escentuals was acquired for $18.20 a share in 2010.

The average gain of 426% in three years is remarkable.

Sirius XM has become a stable and profitable company with fast-growing free cash flow. Chinese advertising mogul Focus Media has overcome some of last year's rocky accusations. Geron failed to live up to expectations, but it's the lone stinker in the list. Ford's engines are revving up again, and there are style points to be awarded for being the lone American automaker not to cave in during the government bailout.

Now let's go over this month's picks.

NetSpend Holdings (Nasdaq: NTSP) -- $9.50
Shares of NetSpend climbed 13% on Friday after posting strong quarterly results.

NetSpend is a pre-paid debit card provider, and you can imagine how this would be a thriving business now with traditional credit card issuers and banks in general getting pretty particular about whom they dole out plastic to.

The number of NetSpend cardholders enrolled in direct deposit rose 20%, with gross dollar volume going from $2.5 billion to $2.8 billion.

NetSpend is eyeing a profit of $0.51 a share to $0.55 a share for all of 2012, pricing the stock at a reasonable 17 to 19 times projected profitability.

Jiayuan.com (Nasdaq: DATE) -- $7.20
I singled out China's top online dating site in this column five months ago when the stock was at $8.69. I would normally be dismayed to see it trading 17% lower, but this really only makes it a better match.

The world's most populous nation is still pretty old-fashioned when it comes to courting, so online dating is going to be a harder sell in China than it is here. However, it's hard to argue against Jiayuan's success.

Revenue climbed 85% to $14.3 million in its most recent quarter, and adjusted earnings nearly tripled to $4.5 million. Yes, this is a scalable model. As impressive as Jiayuan's net margin of 31.5% seems, it will probably even get better.

Jiayuan has seen its active monthly users climb from 4.2 million to 5.56 million over the past year, but the real impressive growth can be found in counting the users actually paying to be on the site. Jiayuan is a free site to use, but members pay to send messages and virtual trinkets to one another. The number of monthly paying users has nearly doubled to 1.25 million.

China's mate-seekers are warming up to Jiayuan, even if investors don't all feel the same.

CBIZ (NYSE: CBZ) -- $6.69
Giving mid-sized business the ability to outsource professional services gives CBIZ customers a shot at thinking bigger without having to invest heavily in internal HR departments, medical practice management, or other enterprise offerings.

CBIZ is coming off a ho-hum 2011 where revenue was flat, but adjusted earnings climbed 12%.

CBIZ is eyeing modest organic revenue growth in 2012, with profitability inching even higher. After earning $0.58 a share in 2011, Wall Street is forecasting net income of $0.63 a share this year and $0.68 a share come 2013.

Profitability and movement in the right direction aren't characteristics you see in most stocks mucking about in the single digits -- and this is before the economy picks up and demand for CBIZ spikes.

Apollo Investment (Nasdaq: AINV) -- $7.20
Apollo was one of the worst-performing business development companies last year, and 2012 didn't get off to such a hot start when it revealed plans for a dilutive offering.

Investors flock to business development companies for their meaty payouts. Apollo provides debt financing to money-hungry businesses through secured loans, gaining preferential tax status by passing on most of its income to its investors. Apollo sports a healthy 11% yield.

Apollo hasn't impressed all of my fellow Fools.

Dan Caplinger recently pointed out that trailing 12-month returns on equity have turned negative for the first time in two years at Apollo. However, I think this is the point in the economic cycle where buying into business development companies will pay off as less of their investment will go under.

Sonus Networks (Nasdaq: SONS) -- $2.47
Sonus arms companies with session border controllers, policy and routing servers, and other gear that helps enterprises update their traditional networks to IP networks.

Sonus reports after its latest quarterly results tonight, so this is a dangerous call. I'm also going without a net here, since Sonus has disappointed investors with surprising deficits in two of the past three quarters.

Sonus has been trading in the single digits for most of the past decade, shedding more than two-thirds of its value since its post-bubble peak five years ago. As you can tell from my picks of CBIZ and Apollo Investment, I'm upbeat about the near-term prospects for an economic recovery. We can't judge the next five years at Sonus by what has happened over the past five years.

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 at the heart of the Rule Breakers newsletter that I write for. You can check it out for free this month with a 30-day trial subscription. There are roughly half a dozen active stock recommendations in the growth stock research service trading for less than $10 at the moment -- Jiayuan included. Check those out, and I'll be back with more on the third Monday of next month.

If you enjoy low-priced stocks because they have the potential to generate huge gains, you'll want to read about the next rule-breaking multibagger. The report is free, so it's even cheaper than some of these stocks. Check it out now.