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Low-priced stocks are often more volatile and can present greater risks, but these stocks can also provide huge rewards when bought at or near the bottom. While it makes sense to keep a proper asset allocation in a portfolio that includes fixed income assets and blue chip stocks, it can also make sense to have some exposure to low-price and more speculative stocks that offer major upside potential. Jim Cramer sees the opportunity when speculating in low-priced stocks and he recently the opportunity individual investors have in this sector by stating:

"Money managers fear the downside of stocks that appear broken, so they will not invest in single-digit stocks. Their pessimism allows investors to benefit from this "classic mispricing," Cramer said. When the fundamentals of these companies start to turn, investors can buy them at "terrific" prices because the "big boys" won't go near them." He goes on to say: "All of these stocks were supposed to be trash, they were dumpster juice," Cramer said. "But if you went dumpster diving, then you caught doubles or triples."

One of the best picks Cramer made this year was when he told investors to buy Sprint (NYSE:S) which had been beaten down to about $2 per share by short sellers who were hoping that the stock would keep dropping and by shareholders who got caught up in the fear and sold as their emotions took over. In just about 3 months, Sprint shares nearly tripled in value and still have more upside potential. Here is a closer look at Sprint and a few other low-priced stocks that have major upside potential into the start of 2013:

Sprint shares have outperformed most stocks in the past few months, but substantial upside potential remains. Sprint is the third largest wireless phone company in the United States. Management has taken a number of steps to remain competitive and improve fundamentals. Earlier this year, it launched 4G LTE services in several major markets. Sprint offers a wide range of mobile devices and it has recently expanded smart phone offerings and it even sells the very popular iPhone. In the past few weeks, the balance sheet has been strengthened and the company has increased cash levels. Softbank recently announced that it intended to buy about 70% of Sprint which will further strengthen its financial resources. The risks for this company include competitive pressures from larger carriers and Sprint will have to invest heavily to retain market share. However, Sprint management appears to be up to the task and if the CEO continues to execute, this stock could keep trending higher. Analysts at Argus have set a $7.50 price target and have a buy rating on Sprint shares. That could provide investors with gains of nearly 50% from recent levels.

I bring up Sprint because it is a great example of a low-priced stock that (more than) doubled in a short time, and because it has additional upside potential. Now let's take a look at 4 stocks that trade below $6 which also have the potential to double:

Swisher Hygiene, Inc. (NASDAQ:SWSH) is a leading provider of services and products to a wide variety of businesses including restaurants, educational facilities, hotels, retail, healthcare facilities and many others. It offers kitchen soap, sanitizers and antibacterial products, restroom soap, paper and odor control products and service, concentrated and ready-to-use foodservice chemicals, cloth wipes, disposable gloves, floor mats, floor care products and drainage treatments. Over 30,000 businesses in North America are using Swisher's products or services. Since this stock is not as well known, I will go even deeper into details on the potential risks and rewards.

Multi-billionaire Wayne Huizenga is the chairman of Swisher Hygiene. Mr. Huizenga has made fortunes and provided leadership at a number of well-known companies in the past including: Autonation (NYSE:AN), Waste Management, Inc. (NYSE:WM) and (years ago) Blockbuster Video. He owns a substantial stake in this company that is worth many millions even with the stock price at depressed levels. He has used a strategy of buying smaller independent companies in an industry, in order to create a nationally recognized giant. This strategy worked in the waste industry, the auto industry, the video industry, and now he is applying it to the hygiene and hospitality services industry. As an owner or part owner of major sport teams and businesses, he is known for reducing expenses and maximizing profits. Mr. Huizenga owns over 25 million shares or nearly 15% of the entire company. Steven Berrard has worked in leadership positions at Autonation and Blockbuster Video with Mr. Huizenga. Mr. Berrard also owns about 25 million shares, and these two have made lots of money for themselves and their shareholders in the past. It is also worth noting that "FMR LLC" which is more familiarly known as "Fidelity Investments" owns nearly 22 million shares or about 12% of the entire company and another well-known mutual fund "Vanguard" owns over 5.7 million shares of Swisher Hygiene.

Like many of Mr. Huizenga's past enterprises, Swisher was growing very rapidly due to many acquisitions. The company was expecting annual revenues to exceed $300 million with growth rates that top 300%. However, it might have been growing too fast and that appears to have led to the accounting complexities that can arise when multiple firms are rapidly consolidated into one balance sheet and one set of financials. Swisher shares have declined substantially in the past few months because the company announced it would need to restate earnings. However, the company is working to correctly restate the financials and it appears that the market has exaggerated the extent of this issue. This stock regularly traded over $6 per share in 2011, and even went over $10 before the restatement was announced. At current levels, this stock trades below book value of $2.02 per share. If a restatement is completed and even if it results in reduced earnings for past quarters, this stock could be poised for major gains and a possible short squeeze. Companies that run into accounting restatements but eventually get past this issue sometimes do see the stock price fully recover to former highs. In Swisher's case that could be back up to the $6 to $10 range, which gives this stock an excellent risk to reward ratio. The downside risk appears limited at current levels because it's clear a real business exists. Plus, even if the restatement results in a writedown, there is a good chance it will be a non-cash charge that has no impact on current cash levels, or on future financial results. That means that the stock could be worth a good deal more than the current price, even with a writedown. If the writedown is not very significant, the stock could shoot straight up.

This company has been made what it is today by making many acquisitions, and this means that the chances of a major revenue issue are quite limited. That's because the chances that a number of completely different acquisitions that are also geographically diverse, were all having some major revenue or profitability issues is not likely. The most likely scenario is that rapid growth and consolidation of various accounting methods created errors which are time-consuming to correct but not at risk of creating long-term issues to the company or shareholders. That's why this "sleeper" stock could be poised for a major rebound rally in 2013. Analysts at Robert W. Baird had a $7 price target and an "outperform" rating on Swisher shares, but lowered the price target to $3 after the restatement issue came up. Even at $3, this would provide investors with more than a double, and if the restatement is completed satisfactorily, price target upgrades back to about $7 per share would seem reasonable. It's worth noting that the company recently announced it sold its "Choice Environmental Services" division for about $123 million (which is equivalent to about 71 cents per share). That is a huge sum considering the market capitalization of Swisher is just about $230 million and this shows how valuable some of its business are. With this significant amount of new capital from the proceeds of the sale, Swisher Hygiene will pay off its Wells Fargo credit facility for $17.2 million, and equipment leases associated with the operations of Choice totaling $13.2 million and an outstanding note in the amount of $2 million. This leaves Swisher with a major cash horde (many tens of millions of dollars) and very little debt of about $13 million. That means there appears to be no balance sheet risk for investors since this company has an extremely strong financial position. It's also worth considering that Wayne Huizenga appears well-positioned to take this company private, if he chooses to do so at some point in the future. Based on the past history of major success at companies Mr. Huizenga has been involved in, and considering the strong balance sheet and stable business model, it would not be surprising to see this stock revert back to the over $6 per share level in the long-run. However, in the short-term, it appears that this stock has bottomed-out and a move back to over $2 seems likely in the next couple of weeks as tax-loss selling comes to an end.

Zynga, Inc. (NASDAQ:ZNGA) shares have seen a huge slide in 2012 and now trade for just over $2 which is well below the 52-week high of nearly $16 per share. Investor interest in social gaming and networking stocks were riding high just before the Facebook (NASDAQ:FB) IPO, but interest waned after the IPO was not well received and business challenges mounted. However, just as investors pushed the shares of Zynga to levels that now appear overly optimistic, the negative headlines and tax-loss selling may have pushed the shares well below fair value. This especially appears to be true when you consider Zynga's cash-rich balance sheet. The company has about $1.32 billion in cash and just around $100 million in debt. That cash horde is equivalent to about $1.69 per share. The book value is about $2.38 per share and the enterprise value is just around $533 million. That appears low when considering that social gaming is still in its infancy and plenty of growth potential remains as mobile devices become increasingly ubiquitous.

Zynga has some of the most popular online and mobile game devices which includes "Farmville" and "Mafia Wars". It needs to continue to develop new games or acquire companies that show promise. With a cash horde of over a billion dollars, it will be able to buy other firms or spend to develop new games in the future. The company seems to think the stock is undervalued and it recently announced a $200 million share buyback. It also announced cost-cutting measures that could improve future results and save around $15 to $20 million per year. One very interesting new development is that Zynga recently filed for a real-money gaming license which means it could be planning for online gambling, which some expect will be completely legalized at some point in the future. This could lead to an exciting new growth opportunity for the company, in time. Analysts at Needham recently upgraded this stock to a buy and set a $4 price target on Zynga shares. With the stock trading around $2, that would provide investors with a double.

Supervalu Inc. (NYSE:SVU) is one of the largest grocery retailers in the United States and it owns some of the best-known brands in the industry such as Albertson's, Farm Fresh, Jewel-Osco, Lucky, Save-A-Lot, and others. It has annual sales of about $35 billion and around 4,400 stores nationwide. The grocery business is extremely competitive and that keeps margins at razor-thin levels for many companies. Retailers like Whole Foods (NASDAQ:WFM) have stayed above the fray by offering organic products that offer higher margins. However, in a tough economy for many consumers, there is still a place for value shopping and that is what Supervalu offers. This stock plunged earlier this year after the company suspended the dividend and announced disappointing financial results. However, the sell-off appears overdone and this stock could be a big winner if Supervalu is able to improve margins in a turnaround, or sell parts or all of the company.

Supervalu is reviewing strategic alternatives and it has a number of parties that are interested in making a deal. The company is making tough decisions and it recently announced plans to close underperforming stores which will save money. This could help turnaround the company in the long-term and make it more attractive to an outside buyer. This company remains profitable and it has positive cash flow. Based on that, the stock looks very undervalued at just a fraction of its 52-week high of nearly $9 per share. Supervalu seems to be well on its way to doing a deal with Cerberus which could unlock value in these shares. It appears that Cerberus is interested in buying Albertson's and Save-A-Lot. If a deal happens, the stock could jump, but it could also see big gains if the company remains independent and completes a turnaround plan. One analyst sees this stock going up to $8 per share (or about 100% gains from current levels), if the Supervalu turnaround plans are successful. Either way, the stock appears to have significant upside from current levels.

Genworth Financial, Inc. (NYSE:GNW) shares have been volatile and under pressure at times in the past year. This is because the company faces ongoing challenges because it is a major mortgage insurance provider. Since the 2008 financial and housing crisis, mortgage insurance has been a tough business due to significant claims. Genworth is also in the long-term care insurance business which has been less profitable for many companies because low interest rates have reduced investment returns and because people are living longer than expected. Losses from the mortgage insurance division have reduced the capital levels and put the company at risk of a credit ratings downgrade. However, the company is taking steps to prevent that and boost capital levels by reviewing and implementing strategic options. If Genworth has made it this far, it sure seems likely that it will continue to work past the current challenges, especially with new signs that the housing market is improving. The stock has been trending higher recently, but it still looks cheap with plenty of long-term value. For example, the shares are trading for just about 5 times earnings and well below book value which is around $32.15 per share. Genworth has been one of my favorite stocks to buy on dips because it could double over time. Analysts expect the company to earn over $1 per share in 2013 and if you put a market multiple (the S&P 500 currently trades for about 14 times earnings) or even a bit less, on this earning power, these shares could trade for about $14. That would provide investors with a double from current levels, and that is why I remain a buyer of Genworth on major dips.

All of these picks have major upside potential and most are poised to benefit from the end of seasonal tax-loss selling and a January relief rally when tax-loss selling ends and some shorts cover. That is one reason why the risk-reward ratio seems to be very favorable to accumulate positions now. Based on the analysis above, it seems that Swisher Hygiene has the most upside in the near-term, but as evidenced by analyst price targets and other factors, all these stocks appear to have strong upside potential.

Data is sourced from Yahoo Finance. No guarantees or representations are made. Please consult a financial advisor before making investments.

Source: Why These Below $6 Stocks Can Double In 2013 And Sprint Could Gain 50%