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Here is a list of cheap stocks whose recent price weakness may have created opportunities. While the names carry significant risks, we think that they have the potential to double in price.

American International Group (AIG)

The maligned international insurer continues to be haunted by its dramatic failures during the financial crisis. In addition, the government's looming sale of their 92% stake in the insurer is a significant headwind, but based on valuations and asset diversity, quality and scale, American International Group may actually deserve a premium rather than a discount to the rest of the insurance industry. If this happens, the stock price would easily double, which is a major achievement for a company of this size.

The company trades at a very cheap valuation. With a book value of $46.80, AIG trades at a 32% discount to book value. In addition, the company's CEO testified to a congressional panel that AIG's normalized operating earnings would be around $7 billion. Based on fully-diluted shares of 1.875 billion, this means that AIG trades at 8.6x normalized earnings. If you account for around $65 billion in tax loss benefits, this company could be an outright steal.

As we discussed in AIG Warrants Still Cheap vs. Peers, investors who are bullish of AIG should consider the long dated AIG warrants that were issued to shareholders as part of the government reorganization. Going forward, the government's sale of their 92.1% stake could continue to hurt stock performance, but considering the company's current valuations, it's very possible that the stock is already pricing in the headwinds from the long telegraphed effects of the government share sale. One possible catalyst will be if the company can place large stakes of the government stake with institutional shareholders.

A123 Systems Inc. (AONE)

The lithium-ion battery and battery systems manufacturer was founded in 2001. The company went public via an IPO in 2009 that priced the stock at $13.50 per share. Since then, despite having favorably viewed technology, the company has faced severe liquidity concerns. They recently raised $254 million to improve their balance sheet and improve their timeline to achieve higher revenues. In addition, with General Electric (GE) as their largest shareholder, there are other potential special situation opportunities.

While revenues have been skimpy, the company could enjoy a major catalyst once Fisker automotive releases their new car which features A123 Systems' 22 kW-h lithium ion rechargeable battery.

Research in Motion (RIMM)

The former high flying technology company was once poised to be an upper echelon technology company after essentially creating the smart phone market with the ground breaking and still important blackberry phones. But the company has faced margin pressures and competitive pressures from competitors likes Apple (AAPL). While these headwinds are real, they are often overstated.

Apple's is considered RIMM's biggest challenge. While this is true investors may give too much credence to the story. The iPhone was introduced in 2007. Since then, Research in Motion's stock price has slumped but financials tell a different story. The year over year revenue growth was 84%, 35% and 33% in 2008, 2009 and 2010, respectively.

The valuations are obscenely cheap. Trailing P/E is 8.39, forward P/E is 7.06, EV/EBITDA is 4.75 and return on assets is 25.13%. Even Nokia Corp (NOK) trades at a trailing P/E of 11.52 and forward P/E of 10.67 despite a skimpy return on assets of 3.90% and uncertainty because of their switch from Symbian to Windows based phones.

The release of RIMM's first tablet, the Playbook, was not without hiccups, but what's clear is that the Playbook is not a copycat product. Blackberry could have made it to the market much faster if they adopted the Android operating platform, but RIMM's commitment to the QNX operating system showed ambition and courage. These are the sorts of characteristics that allowed Apple to come back from a long decline and this could be what helps RIMM regain its position as a top tier technology company.

Going forward, cheap valuations along may be a sufficient catalyst for higher prices. But longer term, the company's prospects will benefit from growing international sales and their dominance in the enterprise market. While some have interpreted the company's problems with India, Saudi Arabia and UAE governments as headwinds, we view it as a reminder to enterprise clients that Blackberry's security is still an industry leader.

Sirius XM Radio (SIRI)

The satellite radio provider operates in North America with 135 commercial free radio, sports traffic, weather, entertainment and talk channels.

While valuations are still very rich, there is a clear trend toward improvement. Trailing P/E is 183 and forward P/E is 36.60. The company could also benefit meaningfully in the near term as pricing restrictions that currently prevent Sirius from increasing the price of the subscription and a la carte packages expires on July 28, 2011. Despite these restrictions, average revenues per user have been increasing. From 2008 to 2010, ARPU increased from $10.56 to $10.95 to $11.73. The company's revenues grew 14%, 48.6%, 80.4% and 45% in 2010, 2009, 2008 and 2007. As impressive as this growth has been, the company continues to face secular opportunities as well as an untapped global market.

OmniVision Inc (OVTI)

The high quality smartphone camera maker could be poised for additional upside as it benefits from riding Apple's growth trends as well as secular growth in the smart phone industry.

The company has cheap valuations for a high quality Apple derivate. It trades with a forward P/E of 10.89 and PEG ratio of 0.84. But OmniVision has $600 million of cash and investments. Excluding the excess liquidity, the company trades at a forward P/E of 7.15. According to their 10-K, in fiscal 2010, the company shipped 475 million image sensors, a 41% jump from the 335 million shipped in 2009.

While valuation is the main driver, we think continued market growth will create new opportunities. In addition, OmniVision could be viewed as a takeover candidate by companies like Taiwan Semiconductor (TSM) or Apple Inc.

Source: 5 Stocks That Could Double in Price