Penny stocks can make you rich. Need proof? Every one of these multi-baggers was, at one time, a penny stock:

Company

Recent Price

CAPS Stars (out of 5)

5-Year Return

McDermott International (NYSE:MDR)

$10.77

*****

247.1%

Vaalco Energy (NYSE:EGY)

$5.29

****

190.0%

Terra Industries (NYSE:TRA)

$25.00

****

428.7%

Spartan Stores (NASDAQ:SPTN)

$14.45

****

202.7%

thinkorswim Group (NASDAQ:SWIM)

$7.55

***

228.3%

Sources: Motley Fool CAPS, Yahoo! Finance.

The promise of outrageous returns has periodically made even the world's best stock pickers penny stock investors. Peter Lynch has enjoyed the stock market’s super-cheap seats in the past, and sometimes he still does. The Royce Low-Priced Stock fund has beat the market for a decade by betting on stocks trading near or below $10 a share, including NetGear (NASDAQ:NTGR).

Even the All-Stars in our 130,000-plus Motley Fool CAPS community take to penny stocks. More than a few have been richly rewarded.

Pennies from heaven
So why not invest in penny stocks? I suppose because the SEC has warned us about them. But what if we take the agency's definition literally and limit our choices to stocks trading between $1.50 and $5 a share? And what if we further limit our choices to four- and five-star stocks whose market cap doesn't exceed $2 billion, but is at least $250 million? Surely our new CAPS screener would return some winners, right?

This week when I ran it, 76 stocks made the cut -- not including our last topper, Rackspace Hosting. Let's move on to Manitowoc (NYSE:MTW), which has a strong, if skeptical, following in our CAPS community:

Metric

Manitowoc

CAPS stars (out of 5)

****

Total ratings

1,676

Percent bulls

97.6%

Percent bears

2.4%

Bullish pitches

262 out of 267

Data current as of March 5, 2009.

Bulls worry about Manitowoc's $2.6 billion debt load, taken on to finance its recent acquisition of Enodis. The deal has yet to pay off. Manitowoc's fourth-quarter backlog for cranes and crane equipment dipped 34%, leading management to cut jobs in the segment.

So why buy? Valuation. "November was a little early to get in on this ... quite cheaper now and still part of any infrastructure play. The world population is still growing and construction will boom once again despite current economic situation. IF Manitowac survives the next two years it will multiply in value nicely over the long term," wrote CAPS investor teamrider on Monday.

The bar is pretty low. Manitowoc trades for less than twice trailing earnings, and investors value each dollar of revenue as if it's worth just $0.07. Thus, I agree with teamrider; any result other than bankruptcy should enrich investors who buy now.

But I'm also just one Fool. I'm far more interested to know what you think. Would you buy Manitowoc at today's prices? Let us know by signing up for CAPS today. It's 100% free to participate.

See you back here next week with another penny stock from heaven. Fool on!