Take a Pass on Applied Digital

Editor's Note: This column was originally sent to subscribers of TheStreet.com's Stocks Under $10 on Thursday, Dec. 9 at 8:17 a.m. EST.

There are a lot of great stock plays in the Under $10 space that we examine every day, and we are always on the look out for new names that bring value to our model portfolio. But from time to time, our search for the next big winner uncovers a stock that could destroy your performance, and bring you a lot of heartache along with it.

We have found one of these potential disaster stocks in Applied Digital Solutions (ADSX Quote), and we would be sellers of the stock here at $6.88 a share, near its 52-week high.

Applied Digital, through its basket of acquired subsidiaries, which includes publicly traded Digital Angel (DOC Quote), markets advanced security products that use radio-frequency identification, or RFID, and global positioning satellite systems, or GPS. Many of Applied Digital's products are used to store and deliver information that is used to monitor and protect wildlife and our food supply, among other applications. In addition, its voice, video and data networks are used to provide secure communications between government offices. ...