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Every year, there are a handful of stocks that more than double with fundamental gains and investor optimism. However, in 2012, the stocks that more than double could be stocks that fell in 2011 despite fundamental gains. There are a large number of stocks that are trading lower in 2011 despite showing incredible growth. Conditions in Europe have caused us to trade stocks with fear rather than with an eye to fundamental growth. I anticipate that 2012 will be the year of the recovery, with fewer momentum stocks trending higher. Although there will be some stocks with large gains in 2011 that will continue to trend higher, I expect the majority of large gains to be stocks that have been beaten down in 2011 because of fear and speculation. Therefore, we'll be looking at 6 stocks expected to trade higher in 2012 and potentially double. Most are stocks that have yet to trade higher on fundamental gains along with a few stocks that have posted gains in 2011, but are growing so remarkably fast that gains should continue. Chart forSIRIUS XM Radio Inc. (NASDAQ:<a href='http://seekingalpha.com/symbol/siri' title='Sirius XM Holdings Inc.'>SIRI</a>)

Sirius XM (SIRI) has posted a YTD gain of 10% after trading with a loss following the selloff in late July. SIRI fell with the rest of the market in late July, and although it's recovered, it's still trading with a 25% loss since July 15. Yet during the last 5 months, the company's announced two remarkable quarters and failed to trend higher because of the market's large loss on both days that SIRI announced earnings. Sirius has grown revenue at a 6% growth rate year-over-year, but has drastically improved its earnings and margins during the last 12 months. In fact it currently trades with a P/E over 51 but has a forward P/E of just 25 because of its impressive growth rate and its improved margins. The stock typically trades with a high valuation, and I expect that it will continue to trade with a high valuation, above 50, and that it will more than double in 2012 with continued improvements in margins. The company should also benefit from auto sales, which are at the highest rates since cash-for-clunkers, and with a new Sirius 2.0 product, the company's retention rates and interest should also be at an all-time high. Overall, 2012 is shaping up to be a great year for SIRI and for investors who take advantage of its current price under $1.85. Chart forSprint Nextel Corp. (NYSE:<a href='http://seekingalpha.com/symbol/s' title='Sprint Corporation'>S</a>)

Sprint (S) has been one of the hardest hit stocks of 2011, with a 45% loss year-to-date. However, up until June 2, the stock was trading with gains of 40%, and then reversed when the conditions in the market began to worsen, and the stock trended lower by nearly 60%. The stock has continued to post larger loss and smaller gains with the volatility of the market, and up until recently, the stock was trading near 52 week lows despite the market trading much higher than its 52 week lows. I am predicting that Sprint will be one of the best performing stocks of 2012 and would make a great addition to any value seeking investor's portfolio.

For the first time, in a long time, the company is posting higher revenue and has improved its margins with less net loss. Sprint appears to be operating more efficiently, and for the first time, is now selling the most sought after brand in technology, Apple (NASDAQ:AAPL). The company's also upgrading its network and is the only communications company to offer unlimited data with its service plan. Although the unlimited data appears to be its strength, some have suggested that this feature could be the company's weakness. The iPhone, which should improve retention rates and create much higher revenue, typically results in higher costs because of data usage associated with the device. The company finally has a service and a product that competes with its competitors, and I can't imagine that it would end its unlimited data service in the immediate future. I don't necessarily expect Sprint to achieve profitability in 2012, although I do expect at least 1 quarter of profitability and much higher revenue with better margins. At the end of the day, I believe that investors want progress and want to know that the company is progressing and not regressing, and with the addition of the iPhone, I expect major progress and a stock that more than doubles in 2012. Chart forAlcatel-Lucent, S.A. (NYSE:<a href='http://seekingalpha.com/symbol/alu' title='Alcatel-Lucent'>ALU</a>)

Alcatel-Lucent (ALU) is a technology company with a significant presence in Europe, and it has fallen by 47% during the last year. The company's global presence is substantial, and many fear that its presence may be a hindrance rather than a luxury, to consistent growth. Therefore, the loss is more speculative than fundamentally driven, because fundamentally the company's had a breakout year in 2011. ALU is trading with its best margins in several years, and the company's first year of net income in more than four years. Yet despite this fact, the stock continues to trade lower and investors fear that because the company lowered guidance, as a precaution, in Europe for the upcoming quarter, that it could be a sign of things to come. I'm expecting very large gains from ALU during 2012: The company's invested a large sum of time and money into its mobile networks and bandwidth services in some of the most underdeveloped, yet most populated, areas of the world.

Alcatel-Lucent has partnerships with two very large telecom companies in both the European and Asian-Pacific regions of the world; and in these regions, the company is developing its 4G LTE technology, and is currently in its "test run" phase in Madrid and Barcelona before offering the service throughout Spain and other countries. The 4G LTE technology may not sound exciting to us in the U.S., but in other highly populated countries with less communication technology, this service is exciting. I believe that Alcatel's strategic plan is both working and will prove to be affective, because while other companies struggle for market share in the U.S, ALU is playing on a much larger field throughout the globe. I expect that as the company's services expand, and it lowers its dependency on the U.S, its revenue, earnings and margins will all improve even more, and the stock will recover to more than double in 2012. Chart forPacific Ethanol, Inc. (NASDAQ:<a href='http://seekingalpha.com/symbol/peix' title='Pacific Ethanol, Inc.'>PEIX</a>)

Some have argued that ethanol is a dead commodity, and that its glory days are behind it; however, if you follow Pacific Ethanol (PEIX), then you might challenge this opinion. PEIX has declined 83% during the last year, but has gained more than 170% over the last 3 months, and is now presenting a perfect opportunity for large gains. The stock's been very volatile during the last year, yet fundamentally, continues to improve. The stock's recent gains have been the result of record earnings which include: a 71% year-over-year gain in gallons sold; its 9th consecutive quarter of increased gallons sold; and a 490% year-over-year gain in net sales. The company is trading with much better fundamentals and continues to improve its margins. I'm expecting very large gains in PEIX during the next year: ethanol prices continue to increase and the company has secured its first management agreement beyond PEIX plants which show outside growth and expansion. I'm also optimistic regarding the future of ethanol after many failed attempts to push natural gas among politicians. Ethanol serves many purposes including cleaner fuel, cheaper gas, cleaner air and less dependency on foreign oil, which may entice more demand. The future appears bright for this small cap stock, and the stock is trading with loss despite great fundamental gains. I see no reason that PEIX won't continue to trade higher with large profits for many quarters to come. Chart forRoyale Energy Inc. (NASDAQ:<a href='http://seekingalpha.com/symbol/royl' title='Royale Energy, Inc.'>ROYL</a>)

I am not particularly fond of investing in natural gas companies, however, I do like Royale Energy (ROYL), and because of its valuation, I expect it to more than double in 2012. The company's made several substantial discoveries of natural gas, including two recent discoveries in its core areas. The company's production rate of the new areas is 3 million cubic ft of natural gas per day, and it has produced over 2 billion cubic ft of natural gas from its Goddard Wells, and regardless of natural gas prices, the level of production is huge and should return large profits for this small company, which is valued at just over $40 million. The only question will be the price of natural gas: if the commodity can stabilize or trend higher, and if it can trend higher, then there's no limit to the gains that this stock can provide. However, if natural gas continues to decline, then it will limit ROYL's gains, although I still expect gains regardless of the commodity's price action because its fundamental progress is simply too strong. Chart forZAGG Inc. (NASDAQ:<a href='http://seekingalpha.com/symbol/zagg' title='ZAGG INCORPORATED'>ZAGG</a>)

Zagg (ZAGG) may very well be the most controversial stock on this list, however, its growth cannot be denied. The stock's lost nearly 50% of its value since August 1 after returning gains of 500% during the year prior. Some have searched for reasons that ZAGG has lost so much of its value, and a few arguments have been increased competition and a high level of supply that could affect its earnings. I, however, believe its recent loss is simply profit taking after a 500% gain and that it's now trading at a value for large gains in 2012. The stock's trading at just 20x earnings, yet continues to grow. The company's earnings did show some signs of weakness during the last quarter, which includes a near 50% drop in earnings, which reflect the company's consistently declining margins. However, revenue once again doubled year-over-year, and the company recently increased its full-year guidance because of strong holiday sales for both Zagg and ifrogz products. I expect for 2012 to be a big year for ZAGG, and I anticipate strong sales during the current quarter and even better sales in 2012 with new products from Apple and Android based smart-phones.

Disclosure: I am long S, PEIX, ROYL.

Source: 6 Stocks Under $10 To Double In 2012