10 Best-Performing Stocks Under $5 in 2011

3. Adolor Corp. (ADLR)

Company Profile: Adolor develops new products and delivers advanced pain and pain-management therapies.

Adolor wouldn't make the list of best-performing stocks under $5 this year if it weren't for a takeover bid in October from Cubist Pharmaceuticals (CBST), which will buy the company in a $415 million deal.

Share Price: $4.69 (Dec. 2)

2011 Total Return: 287%

Analyst Ratings: As Adolor is an acquisition waiting to happen, the analysts following the stock are split over what investors should do. Three say the stock is still a "buy" while the other two researchers following Adolor say investors should hold onto shares.

TheStreet Ratings has a "sell" rating on Adolor shares, saying that "the company's primary weakness has been its disappointing return on equity."

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2. Majesco Entertainment (COOL)

Company Profile: Majesco Entertainment makes video games mainly for the family-oriented, mass-market consumer.

Majesco's run this year started in January when the company announced it had shipped more than 500,000 copies of its Zumba Fitness video game for the Wii, Xbox 360 and PlayStation 3. Later that month, the company announced it regained compliance with the Nasdaq's minimum bid price requirement for continued listing.

In early March, shares of Majesco climbed higher after the company posted better-than-expected fiscal first-quarter financial results, with revenue jumping to $48.5 million from $29.2 million in the same period a year earlier. In June, Majesco upped its full-year revenue outlook as it expects to ship 17 new games this year across platforms like the Xbox Kinect, Facebook, Nintendo's 3DS and Apple's iPhone.

Share Price: $3.10 (Dec. 2)

2011 Total Return: 303%

Analyst Ratings: Majesco garners three "buy" ratings from Needham & Co., Northland Securities and Sidoti & Co. Majesco also receives a "neutral" rating from Wedbush. The average price target of $4.42 is 42% above current levels.

TheStreet Ratings has a "buy" recommendation on Majesco Entertainment after upgrading the stock in October. While TheStreet Ratings says the company has some minor weaknesses, the report lauds the company's "robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, solid stock price performance and impressive record of earnings per share growth."

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