Top 10 'Buy'-Rated Stocks Under $5

2. Sprint Nextel(S)

Company Profile: Sprint Nextel offers a range of wireless and wireline communications products and services.

Share Price: $4.39 (Sept. 8)

2010 Stock Performance: 20%

Analyst Consensus: Of 31 research firms covering Sprint, 12 say investors should buy the stock. Another 14 recommend investors hold shares, while 5 analysts have a "sell" rating on the telecom company. The average of 17 recent stock-price targets is $4.97, which is 13% above where the stock currently trades.

Bullish Case: In a Sept. 2 research note, Wells Fargo Securities senior analyst Jennifer Fritzsche reiterated an "outperform" rating on Sprint and a valuation range of $5.50 to $5.75. "Based on our findings, we believe there is likely upside to Street expectations for postpay subscribers," Fritzsche wrote. "We believe this is being driven by both stable gross adds as well as possible downside surprise in churn. We continue to believe postpay sub direction and stability around this metric is key to this story."