Buying stocks simply because they trade for less than $10 remains one of the "lowest" -- but most tempting -- forms of investing out there.

After all, nothing trounces Mr. Market quite like a $2 stock that moves into double digits over a short period of time. Unfortunately, because of the numerous risks that low-priced stocks carry, these mega-multibagger returns don't occur as frequently as one would like.

Price means nothing
Here at the Fool, we do our darndest to diagnose and prevent the critical stock-affliction known as cheap-osis -- the belief that a stock's per-share price, on its own, tells you whether a stock is cheap or expensive, attractive or unattractive, a winner or a loser.   

Through the use of splits and reverse splits, management can make the price of its shares literally anything they want. That's the reason a $100 stock like China Petroleum & Chemical (NYSE:SNP) might very well be a great opportunity, while most penny stocks are too wild to buy at any price.

Your weekly dose of sweet 'n' low
Sadly, some incidents of cheap-osis will never be cured completely. So, with the help of our Motley Fool CAPS intelligence database, we'll screen for stocks trading at less than $10 that also have enough investment merit to earn a CAPS rating of five stars.    


Price (as of 8/24/07 close)

Market Cap (in millions)


Techwell (NASDAQ:TWLL)



Semiconductor equipment

Mercer International (NASDAQ:MERC)



Paper, paper products

Carriage Services (NYSE:CSV)



Personal services

Harris Interactive (NASDAQ:HPOL)



Internet software & services

Aurizon Mines (AMEX:AZK)




As always, don't view these stocks as formal recommendations, but rather as ideas you may want to research further. With that said, Techwell and Harris Interactive might be worth some of your Foolish due diligence.

Turnaround tech?
It's no secret that small-cap growth stocks are some of the most stomach-churning investments you'll find. Techwell Technologies, a tiny semiconductor company based in San Jose, is a prime example.

At the start of August, Techwell's stock plummeted 25% over the course of two days after management lowered its third-quarter revenue guidance. The stock has yet to recover, but with 150 CAPS supporters in its corner -- not to mention a very recently gained 5-star rating -- Techwell looks like an interesting candidate to get back to the double-digits.

CAPS Fools seem to be particularly intrigued by Techwell's security surveillance business -- a market that is expected to grow to $6 billion in 2009. With $61 million in cash and investments, no debt, and a roster of more than 100 customers, Techwell looks to be in decent shape to capitalize. 

CAPS player NetscribeSemiCdr surveys the situation:

The need for video surveillance as well as significant improvements in video surveillance technology is continuously increasing. ... Looking at all the above developments, the future growth prospects at Techwell continue to be strong, driven by increasing demand for video solutions across Security Surveillance, automotive, and consumer electronic markets.

Poll position
Harris Interactive, a New York-based market research company, is another low-rider that our community has high hopes for. Through its well-known Harris Poll, one of the longest running opinion polls in the United States, the company provides strategic information to various end-users. Well, according to our very own CAPS poll, a whopping 95.89% of players who've rated HPOL have a positive opinion of the stock.

Just last Friday, the stock shot up nearly 9% after management predicted that 2008 earnings would surpass analyst estimates. Of course, Fools should try to take any earnings forecast with a grain of salt, but when you couple the company's share repurchases over the last year (10.3 million shares repurchased at an average price of $5.52), with a current EV/EBITDA of 8.9, the stock might be cheap in management's eyes.

Additionally, a pair of Wall Street firms (whose picks we track on CAPS) -- Roth Capital and CL King & Associates -- also likes Harris.     

CAPS player DCFalcon chimes in:

I have no idea how their competitive landscape is, but the overall business should be growing, with people more and more interested in information on the economy, politics, clients, whatever. Profits and cash flows are generally growing, and the company has no long-term or short-term debt on the balance sheet.

The Foolish conclusion
Despite our attempts to educate the investment public about cheap-osis, the allure of low-priced stocks is undeniable. The good news, though, is that there are indeed single-digit wonders out there that can also make great investments.

So, if you really have a bad case of the 'osis and would like to find more good, low-priced stocks for yourself, then head over to our Motley Fool CAPS community. It's 100% free -- the lowest price you'll find anywhere.   

Foolish contributor Brian Pacampara swallows a couple of 10-Ks each day to prevent cheap-osis and owns no position in any of the companies mentioned. The Fool's disclosure policy is always in tip-top condition.