Editor's Note: This was originally published as an alert at 8:55 a.m. EST on Dec. 15 to subscribers of TheStreet.com's Stocks Under $10.

In our search for new investment ideas, we recently ran a screen to find stocks that are trading below $10 a share and have lost more than 50% from their 52-week highs, yet still have growing revenue. The list turned up a handful of names, but a quick review showed that investors were justified in knocking many of these stocks down.

After some scouring, however, we came across food-ingredient producer

MGP Ingredients

(MGPI) - Get Report

, a stock where the selloff seems overdone.

MGP did recently give investors reason to be cautious, lowering its 2005 earnings guidance Dec. 6, citing weaker demand for its lucrative low-carbohydrate products. The company's products are used as ingredients in everything from baked goods and alcoholic beverages to cosmetics and ethanol fuel.

Management now expects the company to earn just 40 cents to 50 cents a share in the fiscal year ending in June -- a dramatic cut from its previous guidance of $1.03 to $1.08 a share.

MGP was trading around $18 as recently as July, but that guidance news sent the stock down as low as $6.77 last week. The shares have since recovered to $7.50, or about 15 times expected earnings, but even with the near-term recovery, we view the market's latest punishment as an overreaction.

We believe the shares could potentially move up 20%, to $9, in the coming months. However, we are not buying MGP for the model portfolio now, because we are fully invested and would need to sell out of a position before adding any new names.

A few reasons to check out MGP. Low-carb diets may eventually prove to be a short-lived fad, but we believe there's a secular trend in America where people pay more attention to eating health-conscious fare.

Second, investors are ignoring MGP's other businesses: Low-carb products only counted for 19% of total revenue in the most recent quarter. We believe the Street's expectations are now low enough that the company could actually surprise to the upside in 2005. MGP's 15-cent annual dividend could also lend support to the shares. Even with the new earnings guidance, the company's attractive 2% yield can be covered three times over by forecasted 2005 earnings.

Finally, MGP scores well on our proprietary Alpha Factor, which gauges a stock's potential to make relatively large moves when sparked by a catalyst. There are only 10 million shares in the float and three analysts following the company. In addition, more than 1.2 million shares are reported short and any recovery in management's earnings forecast could cause the bears to scurry to buy the shares back.

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In the meantime, we're placing MGP on our shopping list for when we have room in the model portfolio for a new stock.

P.S. Remember, stocks priced under $10 have the potential to move quickly. So, you might want to get our current recommendations now with a

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to TheStreet.com Stocks Under $10.

William Gabrielski is a research associate at TheStreet.com and is accredited with a Series 7 license. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Gabrielski welcomes your feedback and invites you to send your comments to

william.gabrielski@thestreet.com.

Interested in more writings from William Gabrielski? Check out Stocks Under $10. For more information,

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David Peltier is a research associate at TheStreet.com In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Peltier welcomes your feedback and invites you to send your comments to

david.peltier@thestreet.com.