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Top 10 Penny Stocks of 2010

9. SMTC (SMTX) is an electronics manufacturing services provider based in Toronto. Shares finished 2009 at 88 cents after spending most of the year trading below the $1 mark.

Closing Price: $3.56 (June 16)

Total Return (YTD): 304.6%

Developments in 2010: In March, SMTC reported a fourth-quarter profit of 16 cents a share, doubling the single-analyst estimate and sending shares higher. SMTC followed that in May by reporting first-quarter earnings from continuing operations of 14 cents a share compared with a year-ago loss of 6 cents a share. Later in May, SMTC said it amended loan agreements with Wells Fargo Capital Finance Corp. and Export Development Canada to refinance its short- and long-term debt. In June, SMTC said it adopted a rights plan, or "poison pill," designed to protect the company's approximately $100 million in U.S. federal net operating loss carry-forwards (NOLs).

Valuation: SMTC shares are trading just below their 52-week high of $4.30, and the company has seen a sharp uptick in share volume to levels not seen since the stock traded above $7 per share in 2007. SMTC shares currently have a price-to-book ratio of 2.49, which is expensive compared to peers in the electronic and electrical equipment sector. However, the stock has a minuscule price-to-sales ratio of 0.27, which is well below the sector average of 2.64, according to Bloomberg.

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