7 Stocks That Could Be 10-Baggers

These rejected stocks could grow 10-fold in the current economy.
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Updated from 11:23 a.m. EDT

In early October, 2002, I went to visit two guys who were running a small hedge fund of about $10 million. They had been short

Ford

(F) - Get Report

and

GM

(GM) - Get Report

and a number of other stocks.

I asked them what their view of the world was. I told them I was bullish, but they laughed and said, "That's because you're always bullish. When are you ever bearish?" They said, "It's about to hit the fan. We are massively short everything. America is going down."

(As an aside, both of these guys are in jail now. One wouldn't testify against the other, so he got the larger sentence. The other guy (who was actually the boss) will be out in a year or so. The crime had nothing to do with their hedge fund but with a currency brokerage firm they had been running for 20 years that turned out to be a massive scam. The incident above was the last time I ever spoke to them, and a few weeks later, I saw that the FBI had arrested them and about 30 others in a multiyear sting operation.)

The point is, the world was falling apart in October 2002. Criminals and sociopaths were slitting the throat of America in an attempt to make money on the short side. Back then, inflation wasn't a worry but deflation. And "Helicopter Ben" was threatening to carpet bomb the economy with dollar bills.

How does one do that? By cutting rates. By backing debt at the esoteric parts of the yield curve. By bailing out failing banks. By opening the discount window to banks and lower beasts on the financial evolutionary curve. By even buying stock in a worst-case scenario.

At the time, there were about a dozen stocks trading for less than cash. In other words, they had, for example, $100 million in the bank and no debt, were profitable and had a market cap of less than $100 million. A little company called TheStreet.com was an example of such a stock.

In December 2002, I wrote an article about these stocks for the now-deceased Street Insight, which was later folded into RealMoney Silver. People laughed at me. "They trade below cash for a reason." I was mocked. Children at my kids' schools spit in their faces.

Five years later, many of these stocks (for example,

ValueClick

(VCLK)

) were up more than 1,000%.

Now it's happening again. The same sickness that convinced people that our way of life was a life gone wayward has again spread its bacteria into our heads. So here are seven stocks that I think can grow at least 10-fold, including

Adaptec

(ADPT) - Get Report

and

Heelys

(HLYS)

.

None of these is

Microsoft

(MSFT) - Get Report

or

Google

(GOOG) - Get Report

or

Research In Motion

(RIMM)

. Those are the debutantes at the ball. What follows are the rejects that were never even invited to the party.

For the rest of this article, please click here.

At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions may change at any time.

James Altucher is president of

Stockpickr

LLC, a wholly owned subsidiary of TheStreet.com and part of its network of Web properties, and a managing partner at Formula Capital, an alternative asset management firm that runs a fund of hedge funds. He is also a weekly columnist for the

Financial Times

and the author of

Trade Like a Hedge Fund

,

Trade Like Warren Buffett

and

SuperCa$h

. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;

click here

to send him an email.

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