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Every year, John Dorfman of Thunderstorm Capital (formerly Dorfman Investments) suggests five stocks trading between $5-$10, under the assumption that stocks trading at these levels are too expensive commission-wise for institutional investors, while still attractive to individuals seeking 'undiscovered bargains'. His picks from last year were up 10% (vs. 5.4 for the S&P 500).

From Bloomberg, Dorfman's picks for the coming twelve months:

Journal Register Co. (JRC): 'owns the New Haven Register, 26 other daily newspapers, and 362 other publications... has been profitable for at least 11 years in a row. Last year, even with profits down from 2004 levels, it earned a 22 percent return on equity.'

Grey Wolf Inc. (GW): 'a natural-gas contract driller based in Houston. It deploys a fleet of 114 drilling rigs, mainly in Texas and the Gulf Coast. Although natural gas is not currently in shortage, I believe there will be periodic shortages in the U.S. during the next five years.'

EarthLink (NASDAQ:ELNK): 'fourth-largest U.S. Internet service provider by number of subscribers... reported 10 consecutive years of losses from 1994 through 2003. In 2004 it earned $111 million and last year almost $143 million.... I consider it a good value at nine times earnings and 0.85 times revenue.'

Premiere Global Services (NYSE:PGI):
'trades for about $8 a share lately, a far cry from the price of more than $47 it commanded in mid-1996. Yet profits now are above what they were then... a decent value at 13 times earnings, 1.8 times book value (assets minus liabilities) and 1.1 times revenue.

Sea Containers Ltd. (NYSE:SCR): 'leases cargo containers and operates trains and ferries... Bankruptcy talk has dogged Sea Containers lately. Its debt amounts to 188 percent of stockholders' equity... It fetches only 0.24 times book value and 0.10 times revenue. There is no price-earnings ratio because the company posted losses in its three most recently reported quarters... The company agreed yesterday to sell its Finnish ferry operations and plans to use $510 million from the sale to repay debt.'

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Source: John Dorfman's Five Picks Between $5-$10