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As we near the end of the third quarter, I am reviewing my portfolio to look at all the individual names and how they have done so far this year. I am also looking at all the profits I have already booked on highly profitable trades. I am always looking for "lessons learned" and to plan where I where I will make future allocations.

One anomaly that sticks out through the first nine months of the year is how well I have done with $2 stocks that I have profiled within the past year. This really has no rhyme or reason that I can tell, but it is quite amazing to see how many stocks I have profiled in Seeking Alpha at around the $2 level that have done so well with some doubling and tripling since being profiled. Some of the best high flyers include Pacific Biosciences of California (NASDAQ:PACB) and Himax Technologies (NASDAQ:HIMX).

Hoping to continue the roll, here are three of my favorite $2 picks right now. All are turnaround plays with large net cash positions on their balance sheets to lessen downside and provide enough funding and time to affect turnaround efforts.

Cosi, Inc. (NASDAQ:COSI) is a fast-casual restaurant chain that has some 75 company-owned and 50 franchised locations. The company and the stock have fallen on hard times. COSI once sold in the $30s but currently trades with a $2 handle.

This is mostly a turnaround play. The company recently brought in a new CEO to transform its fortunes. In addition, the company has ~$12mm in net cash on its balance sheet which represents ~30% of its current market capitalization. A beneficial owner has also snapped up some $1mm in new shares over the last few months.

If the new leadership can get the menu and value proposition correct, the stock could have substantial upside. Roth Capital met with the management over the summer and came away impressed and stated it believed the company should be profitable by 2014. Finally, it has some great locations in major urban centers and the company could be acquired for their locations if their turnaround sputters.

TheStreet (NASDAQ:TST) is a digital media company that focuses on the financial, and mergers and acquisitions environment in the United States. I will say upfront I might be biased here as I am a daily columnist on TheStreet.com. That being said, I also have a front row seat for some of the positive changes that the company is going through.

The company brought in a new CEO earlier in the year which seems to be paying dividends. Subscriber growth returned in the recently completed quarter and there is significantly more activity within the columnist community with their audience as well.

The company sits on a mountain of cash as its net cash holdings represent some 70% of its current market capitalization. This is another stock with a beneficial owner increasing his stake by adding more than 400,000 shares this year. The company continues to post small losses but was operationally cash flow positive in the last completed quarter. Only one analyst covers the stock with a $4 price target on the shares.

Limelight Networks (NASDAQ:LLNW) offers content delivery services to deliver media files, such as video, music, games, software and related services in North America, Europe, the Middle East, Africa, and the Asia Pacific. It is a much, much smaller version of Akamai Technologies (NASDAQ:AKAM) which is the market leader in this space.

This is another turnaround play with plenty of cash on the balance sheet. The company's net cash position of almost $120mm represents more than 60% of its market capitalization at its current stock levels. The stock is cheap at less than 80% of book value as well.

Although the company is currently posting small losses, it is cash flow positive from an operational basis. LLNW is currently just under $2 a share and the six analysts that cover the stock have price targets ranging from $2 to $4 a share on the stock. The company recently named a new CEO that is concentrating the company on growing profitable traffic and severing arrangements where it is losing money.

If my history on betting on these kinds of turnarounds holds, a year from now; one of these stocks will be a double or triple, one will be a breakeven scenario and one will lose a bit. The problem is identifying which path each will take, and it is why I hold all three.

Source: My Favorite 3 $2 Turnaround Stocks