Hidden Stock Gems For Less Than $10

Frank Curzio oversees TheStreet.com Stocks Under $10 newslettter. For a $149 annual subscription offer through Dec. 31, click here.

Over the past 12 months, we have seen an unprecedented collapse in the equity markets and have witnessed the worst economic crisis since the Great Depression.

Most investors with whom I spoke during the holiday season were talking about the monumental selloffs in bellwethers like General Electric(GE Quote), Caterpillar(CAT Quote) and Research In Motion(RIMM Quote) -- which have lost more than half of their value.

Because my job is to invest only in stocks under $10, you don't have to tell me how difficult the market is. The stocks mentioned above could be viewed as winners compared to most in my universe, where values are down more than 75% despite solid balance sheets and strong quarterly results.

In a market in which most pundits are recommending dividend-paying stocks and consumer staples, there has been a huge disconnect in some under-$10 stocks over the past couple of months. That's resulted in very solid returns for several positions in the Stocks Under $10 model portfolio.

For example, gold prices fell 25% since July, but most gold stocks were down in excess of 60% in the same time frame. That includes Yamana Gold(AUY Quote), which fell to $4 a share before I recommended it. Even the biggest gold bugs are not expecting inflation in the short term. The outlook for commodities is looking up, with the Fed announcing it will spend as much as it takes to stimulate growth and lowering its key rate to near zero and with the dollar likely to remain weaker over the next few quarters.