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TheStreet Open House

Top Stock Picks Under $5 for 2011

BOSTON ( TheStreet) -- Citigroup (C), Sprint Nextel (S) and Quantum (QTM) may be the best inexpensive stocks for 2011, analysts say.

After a rollercoaster ride in equity markets this year, investors are more than willing to put 2010 in the rearview mirror and look ahead to opportunities in 2011. The case has already been made for investors to pile into quality, large-cap stocks, as money managers expect them to thrive after a decade of sluggishness.

Others may find more value in stocks trading under $5, which typically don't receive attention from mutual funds due to their miniscule share prices. Many of these low-priced stocks have proven to be winners, including SMTC Corp. (SMTX), Wabash National (WNC) and Callon Petroleum (CPE), all of which more than tripled this year.

In January, Jamie Dlugosch of InvestorPlace offered five penny stocks that offered potential rewards in 2010. Some fared incredibly well, while others languished.

  • Sirius XM (SIRI) is up 130% this year
  • Denny's (DENN) has rallied 67%
  • MoneyGram International (MGI) has fallen about 10%
  • Majesco Entertainment (COOL) is down 35%
  • Oilsands Quest (BQI) is down 64%

For potential winners of the coming year, analyst recommendations are a good opinion source. Stocks trading under $5 typically have no analysts' coverage -- never mind a "buy" rating -- leaving investors to do the homework for themselves. However, a select few boast of favorable coverage from analysts, which can have a strong effect on share-price movements.

The following 10 U.S. stocks trade at less than $5 and have garnered the most "buy" ratings from analysts, which could lead to high returns over the next 12 months.

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