Evergreen Solar, Ford Join Stocks Under $10 Watch List

Plus, looking at the housing crisis in more detail, the politicians are looking for a quick fix to a problem that will require much more than a wrench. Tighter lending standards likely mean that fewer people will be able to afford homes. Yet the government is looking to bail out borrowers who bought homes they couldn't afford.

Looking at the bigger picture, we believe housing prices have at least 15% more to fall before reaching bottom. However, if housing prices stabilize, the foreclosure rate is still likely to increase, as the costs associated with owning a home (property taxes, oil, cable access, electricity, etc.) continue to rise. Add to that the huge jump in food prices, which continues to eat into consumers' discretionary income.

Our comments are not meant to panic readers, but simply to point out the risks in this market going forward -- which seem to be discounted by the media and many financial publications that tend to find positives for every negative piece of data. So, while the total 3.25% cut in short-term rates by the Federal Reserve since September and the recent stimulus package provide both short-term and long-term catalysts, it's important to highlight both the positives and the negatives, and then determine if the reward is worth the risk.

Turning to our Watch List, this week we have added Evergreen SolarESLR and FordF.

Shares of Evergreen, which manufactures and sells solar panels, were recently trading around $8.80 -- down more than 50% from its highs -- mostly due to supply concerns. But the company is in the process of manufacturing its own solar panel facility, which will increase capacity by the end of this year.

As with most small-cap alternative energy plays, this stock's fundamentals are sketchy; the company has negative profits and cash flow, but management expects to turn a profit in 2009. This is a high risk/high reward situation, and we need to do more homework before committing any cash.

Next up is Ford, which has been on a tear lately. It's gone up almost 60% in the past month after reporting solid first-quarter results. Also, billionaire investor Kirk Kerkorian has been accumulating shares and now owns roughly 5% of the company. Management has done a stellar job of cutting costs in a very tough environment, which has hurt all automakers, including Ford's archrival General MotorsGM. That could get worse before it gets better, but much of this seems priced into the stock. We will take a closer look to determine if Ford is worth a long-term investment on a pullback.

Evergreen Solar and Ford are on the Watch List for TheStreet.com Stocks Under $10 service. Frank Curzio writes regularly about stocks priced below $10 a share, such as Advanced Micro DevicesAMD, ArrisARRS and Tenet Health CareTHC for TheStreet.com.