10 Top Stocks Under $5 for 2012 Picked by Analysts

9. Sprint Nextel (S)

Company Profile: Sprint Nextel is the third-largest wireless provider in the U.S. by subscriber count, behind rivals AT&T (T) and Verizon (VZ).

Share Price: $2.69 (Dec. 2)

2011 Stock Performance: -36%

Analyst Consensus: Sprint is the one carryover from 2011's list of analysts' most loved stocks under $5, even though the stock plunged 36% this year on a number of developments. The company committed $15 billion to bring the Apple iPhone to its network. However, investors were flummoxed by Sprint's cloudy 4G expansion plan and were downright angry with a funding gap of as much as $7 billion.

Still, nine analysts believe in Sprint's prospects, although that's only about a quarter of all analysts following the stock. The average price target of about $3.39 implies upside of 25%, so there still could be room for this stock to run over the next year.

Bullish Case: Wells Fargo senior analyst Jennifer Fritzsche, who has an "outperform" rating on Sprint, says it is important for the company to successfully get the funding deal done for Clearwire (CLWR) by raising debt.

"There is much liquidity in the marketplace now that has been on the sidelines," Fritzsche wrote in a Nov. 4 research note. "While we realize this market is as much as driven up by macro headlines as anything and much can change on a daily basis, we believe this bodes well for Sprint's ability to get the deal done."

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8. Gastar Exploration (GST)

Company Profile: Gastar is an independent energy company, engaged in the exploration, development and production of natural gas and oil in the U.S. and Australia.

Share Price: $3.45 (Dec. 2)

2011 Stock Performance: -20%

Analyst Consensus: Natural gas stocks have been a speculative play for traders because of the potential for M&A activity. With the stock down 20% this year, Gastar wasn't one of the lucky buyout targets. Analysts, though, say there is plenty of opportunity for a big winner, with 9 out of 12 analysts following the stock rating it a "buy." An average price target of $5.19 would mean a whopping 50% rally in the stock if that came to fruition over the next 12 months.

Bullish Case: KeyBanc Capital Markets analyst David Deckelbaum reiterated a "buy" rating and $5.75 price target on Gastar in November, saying that the company's third-quarter production miss obscured the potential for 2012.

"The pipeline issues in the Marcellus are temporary and do not affect our longer term thesis on the stock, as we see significant production growth in the Marcellus and Bossier shale plays providing significant upside in 2012 and beyond," Deckelbaum wrote in a Nov. 6 research report.

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