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While it makes sense to invest a larger portion of your portfolio in relatively low-risk, large-cap stocks, it can also be very rewarding and a lot more exciting to invest a portion of your portfolio in low-priced stocks that have the ability to generate spectacular returns. For example, a stock like Exxon (NYSE:XOM) might provide stability and some dividend income for a portfolio, but since it is such a large company, it could take many years for that stock to double in value.

On the other hand, low-priced stocks and small-cap companies can see big moves both up and down. For example, shares of communications provider, Sprint (NYSE:S), were trading around $2.25 in May, but in just several weeks' time, the stock has roughly doubled in value to $4.80 (recent call activity in Sprint could be indicating that a move to even over $5 per share, is possible soon). When parking your cash in a money market account means you might get paid less than 1% per year, it can really pay to find the next stock that could provide returns of 50%, 100%, or more.

Buying a few of these stocks in order to diversify and increase your chance of owning the next stock to double in value makes sense rather than going all in on one or two stocks. With that in mind, here are a handful of low-priced stocks that have the potential to provide exceptionally large returns, maybe even double in value like Sprint. (All of three of these stocks are trading well below the 52-week high, which means investors could be getting a real bargain now):

Supervalu Inc. (NYSE:SVU) reminds me of the situation Sprint was facing earlier this year. Sprint was trading around $2.30 per share a few weeks ago, just about where Supervalu shares are now. Both companies continue to face challenges and have had many disappointed shareholders. Also, both Sprint and Supervalu have high levels of short interest. Just like Sprint, Supervalu shares seem to have bottomed-out, and the stock could be poised for a rebound.

This company owns numerous grocery stores, including the Albertson's chain. It recently reported disappointing financial results and a suspension of the dividend, but that bad news seems to be more than priced-in now. On the positive side, the share price has big potential if the company is successful with a turnaround, or a potential sale. The company recently announced it is reviewing strategic alternatives in order to boost shareholder value.

Recent data from Shortsqueeze.com shows there are about 100 million Supervalu shares short. That could fuel a lot of buying, if the company exceeds currently low expectations. Shorts have helped to send Sprint shares higher and recent data shows it could continue with about 175 million shares short in Sprint. The grocery business is fairly stable, but it often runs on thin profit margins. If Supervalu can improve the numbers by just a small amount, or succeed in selling the company, investors buying now could reap generous rewards.

Here are some key points for SVU:

  • Current share price: $2.43
  • The 52 week range is $1.68 to $8.75
  • Earnings estimates for 2012: 73 cents per share
  • Earnings estimates for 2013: 69 cents per share
  • Annual dividend: None

Pizza Inn, Inc. (PZZI) operates a chain of pizza restaurants (over 300 locations) that are located in both the U.S. and internationally. While the "Pizza Inn" restaurants have been seeing relatively steady (if not boring) sales for the past couple of years, there is something much more interesting to consider about this company. It recently launched an award-winning new pizza restaurant concept called "Pie Five Pizza". It is similar to the affordable, open-kitchen and made-to-order with fresh ingredients format that has made Chipotle Mexican Grill (NYSE:CMG) so wildly successful.

The company has already opened six locations in the first year of business for this concept, and going forward, it plans to expand rapidly with multi-unit franchise agreements around the United States. Just days ago, it was announced that the company received and will formally accept the award for Pie Five as a hot new concept, on September 30, 2012, at the annual MUFSO Supershow. This further validates the "Pie Five" concept as a winner and could add more national exposure to investors and franchisees.

The company is currently being run by an interim CEO, but it is looking for a new candidate that can multiply the initial success that this new concept has had, and take it to a new level, nationally and internationally. If the company appoints a high-profile CEO with the right background of developing fast-growth in the restaurant business, this stock could be headed back to the highs it saw earlier this year of more than $6 per share. That would provide current investors with a double, but if this company succeeds in becoming the "Chipotle of Pizza", then even a $6 price target will look way too conservative.

Here are some key points for PZZI:

  • Current share price: $3.20
  • The 52 week range is $2.18 to $7.07
  • Earnings estimates for 2012: not available on Yahoo Finance
  • Earnings estimates for 2013: not available on Yahoo Finance
  • Annual dividend: None

MEMC Electronic Materials, Inc. (WFR) shares have plunged from about $4 to just below $2 recently, but they seem to be on the rebound now. This company makes silicon wafers that are used to manufacture solar panels, computers, and other products. As most investors know, the solar industry has been impacted by a glut of inventory and reduced demand as debt-strapped governments around the world cut subsidies for solar energy. However, the company recently reported better than expected financial results.

In the second quarter of 2012, it sold 144 megawatts versus just 23 megawatts in the same period last year. This boosted cash flow substantially, to $114 million for the second quarter. This was a big improvement from $16.9 million in cash flow for the second quarter of 2011. The company reported a loss of $61.3 million, or 27 cents per share for the quarter, so it still has challenges, but at just $2.50 per share, the stock could just about double in value according to some analysts. The average price target (as tracked by S&P Capital IQ) is $4.71. If MEMC achieves earnings of 35 cents per share for 2013, the $4.71 price target seems reasonable as it would put the price to earnings ratio at just about 13 times.

Here are some key points for WFR:

  • Current share price: $2.66
  • The 52 week range is $1.44 to $7.26
  • Earnings estimates for 2012: a loss of 17 cents per share
  • Earnings estimates for 2013: 35 cents per share
  • Annual dividend: None

Data is sourced from Yahoo Finance. No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 3 Stocks Trading Around $3 That Could Be Poised To Double