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TheStreet Open House

5 Stocks Under $5 That Could Soar

As the economy improves and banks decide to work only with those customers with the most perfect credit scores, companies such as Moneygram are likely to thrive. I just don't see this company reporting anywhere near the $1.18-per-share loss now expected by analysts.

The minute investors realize this company will be profitable again is when shares will skyrocket. It is an easy stock to own at current prices.

Denny's

The casual dining space has been performing very well of late. Stocks such as Buffalo Wild Wings (BWLD) and Red Robin Gourmet Burger (RRGB), for example, have taken off thanks to strong operating performance in the fourth quarter.

Under $5 per share restaurant Denny's (DENN) has not enjoyed the same ride. It recently reported results for the fourth quarter ended Dec. 31, 2010, that missed expectations. Shares have drifted lower on the news and now trade for around $3.90 per share

I recommended this stock previously in 2009 as the editor for a penny stock newsletter. At the time I liked the story of the company. Its discounted menu fit perfectly with a contracting economy. Not much has changed since that initial recommendation, other than the stock being a bit higher.

I still like the company. Shares are attractively priced, and the growth story is solid, given an improving economy with consumer budgets that are still tight as a drum. Analysts expect the company to make 39 cents per share in the current year and 44 cents in 2012.

Buying double-digit earnings growth for a single-digit multiple of earnings has always worked very well for me in the past. I think the same will be true with Denny's.

Camtek

Camtek (CAMT) is an Israel-based company that manufactures optical inspection systems for high tech manufacturers. Its products are quite important to those industries requiring very precise instrument control of its processes.

The company was formed in 1987, and like many stocks trading for less than $5 per share, its shares were pummeled during the last recession. After dipping below a buck a share, Camtek has rebounded to trade around $4 today.

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