Stocks Under $10 Weekly Summary

The broader stock market averages ended the week little changed as investors digested recent gains. As we position the model portfolio for 2013, we decided to buy 75 shares of Yamana Gold (AUY) on Thursday. We also raised our rating on the company to a Two, as the stock had fallen 15% from its recent highs.

Even though trading volume may slow down in the final days of the year, we will continue to monitor the universe of low-dollar stocks for trading opportunities. Volatility could be high next week, due to the higher number of economic reports.

We'll get some housing data in the first half of the week, followed by the final third-quarter GDP reading and initial jobless claims data on Thursday. Friday will bring some regional economic data and the durable goods orders report.

As a reminder:

-- A Game Breaker is going to change the landscape of an industry, as Intel, Microsoft and Wal-Mart did in their sectors. Investors can make big money in these stocks by getting in before the crowd.

-- Inflection-Point stocks have a broken business model that's on the mend, but have yet to be recognized by the market. Investors who recognize a turnaround early can pocket strong returns.

-- Stealth Stocks are often names unknown to the general public, but can be hugely profitable investments, especially when they have catalysts to boost their share prices.

Also, Ones are stocks that we would buy at their current quotes, Twos are stocks that we would buy on a pullback and Threes are names that we would sell into strength. There are currently no Three-rated names in the model portfolio.

ONES

Active Power (ACPW:Nasdaq; $0.72; 7,100 shares; 3.79% of the model portfolio; Game Breaker): Active Power's flywheel energy technology keeps its customers' mission-critical processes up and running. Its hardware also uses half as much space as existing technologies while generating twice as much power. The stock rebounded more than 10% this week, as the company announced a new multi-million dollar contract on Thursday. Active Power also said that Dr. Ake Almgren will be its new chairman of the board. We believe that recent management changes have help put the company back on the right track and maintain that shares have 50% upside potential over the next few months.

Ballantyne Strong (BTN:Amex; $3.20; 2,100 shares; 4.98%; Stealth Stock): The company distributes digital movie projectors and manufactures screens and lighting equipment for theaters. It was a quiet week for the shares, which fell 2%. We continue to believe that Ballantyne is attractive to purchase up to $3.50; as the company is profitable, has a solid balance sheet and trades at a meaningful discount to tangible book value.

Callidus Software (CALD:Nasdaq; $4.41; 1,500 shares; 4.90%; Stealth Stock): Callidus produces enterprise software for the management of sales staff, and the company's recent growth has come from its Software as a Service (SaaS) product offerings. The stock added 3% to recent gains this week, as management announced a new contract win. The company is carrying a lot of operating momentum into the new year and we believe that the shares can move up toward the mid-single digits.

Depomed (DEPO:Nasdaq; $5.85; 550 shares; 2.38%; Game Breaker): The company markets specialty drugs around its oral drug delivery system, Acuform, which are used to treat Type 2 diabetes and post-shingles pain. The shares ticked higher this week, as management gave an upbeat presentation at an Oppenheimer investor conference on Wednesday. As management continues to leverage Acuform over the coming quarters, we believe the stock can trade up toward $8.

Kodiak Oil & Gas (KOG:NYSE; $8.93; 725 shares; 4.80%; Inflection Point): The company explores for oil and gas in the Williston Basin and Green River Basin. The stock added 2% to recent gains this week, even though Suntrust Robinson downgraded the stock from Buy to Hold on Wednesday. Energy prices should remain stable in the new year and we believe the company can continue to deliver above-average production growth in the coming quarters.

SandRidge Energy (SD:NYSE; $6.70; 850 shares; 4.22%; Inflection Point): The company explores for natural gas and oil in the U.S., primarily onshore. The shares were hit with some profit-taking this week and dropped 7%. As management continues to unlock value from SandRidge's asset portfolio, we believe the stock can move back up toward the high-single digits.

Solta Medical (SLTM:Nasdaq; $2.73; 2,850 shares; 5.77%; Stealth Stock): Solta produces medical devices for non-invasive treatments of wrinkles, acne, skin discoloration and fat reduction. This week, stock added more than 7% to recent gains on little news. We believe the company's new products will continue to drive growth in 2013 and that the shares have 20% to 30% upside potential over the next six months.

TriQuint Semiconductor (TQNT:Nasdaq; $4.68; 1,475 shares; 5.12%; Inflection Point): TriQuint produces integrated circuits for a wide range of industries, including wireless handsets and communications networks. The shares dropped 5% this week, on a bearish near-term outlook for Apple (AAPL) sales. Even so, TriQuint remains profitable, has a pristine balance sheet and trades at a discount to tangible book value.

TWOS

Aceto (ACET:Nasdaq; $9.74; 450 shares; 3.25%; Stealth Stock): The company produces industrial chemicals used in the generic pharmaceutical and agricultural sectors. It was a quiet week for the stock, which ticked higher. Aceto launched a new generic antibiotic medication this week and remains leveraged to this secular growth area. In the meantime, the shares sport an attractive 2.3% dividend yield.

Cott (COT:NYSE; $8.10; 500 shares; 3.00%; Stealth Stock): Cott produces and distributes soft drinks, noncarbonated beverages and bottled water, primarily focusing on private-label items for major retailers. The shares fell 2% this week on little news. That said, management is keeping a tight lid on costs and the shares offer consistent growth at a reasonable price. We maintain that the stock can trade up toward the double digits over the coming quarters.

Graphic Packaging (GPK:NYSE; $6.11; 850 shares; 3.85%; Stealth Stock): The company produces paperboard packaging that is primarily used by food and beverage makers. The stock ticked lower this week, as management said it's borrowing on a term loan to repurchase about $300 million of shares. The strategy should be accretive to earnings and we would consider buying another 100 to 150 shares of the company if they fall below $6.

Health Management (HMA:NYSE; $8.15; 700 shares; 4.23%; Inflection Point): Health Management operates more than 50 general care hospitals that are located primarily in the southern U.S. The shares rebounded 7% this week, as Imperial Capital upgraded the company to Outperform from In-Line on Friday. We continue to believe the stock holds value at just 9x expected full-year earnings.

Huntington Bancshares (HBAN:Nasdaq; $6.16; 750 shares; 3.42%; Inflection Point): This Ohio-based bank operates more than 600 branches across six states. The stock ticked lower this week, as Keefe, Bruyette & Woods downgraded the stock on Thursday. We continue to believe that Huntington can gain market share from larger competitors in 2013 and we like that the shares offer a solid 2.6% dividend yield.

Kopin (KOPN:Nasdaq; $3.15; 1,900 shares; 4.44%; Game Breaker): Kopin manufactures semiconductor wafers for wireless and fiber-optic equipment. It also makes small liquid-crystal display (LCD) screens that are used in a number of products, including consumer electronics and military night-vision gear. The shares rebounded 2% this week on little news. The company remains flush with cash and leveraged to continued growth in demand for smartphones and tablet computers. We maintain the stock can move up toward $4 over the coming quarters.

Martha Stewart Living Omnimedia (MSO:NYSE; $2.44; 1,800 shares; 3.25%; Inflection Point): The company operates in the home goods segment, publishing magazines, producing broadcasts and licensing products to retailers. It was a quiet week for the stock, which fell 2%. We maintain the new management team can unlock value from Martha Stewart's core brands. We believe the stock has 20% to 30% upside potential over the next six months.

NPS Pharmaceuticals (NPSP:Nasdaq; $9.77; 600 shares; 4.34%; Game Breaker): NPS is a biopharmaceutical company that develops specialty therapeutics for gastrointestinal and endocrine disorders. It was a volatile week for the shares, which ticked higher. The company will likely receive FDA approval for Gattex by the end of the year and we continue to believe the stock can trade up toward the low teens.

ON Semiconductor (ONNN:Nasdaq; $6.92; 400 shares; 2.05%; Stealth Stock): The company makes analog, standard logic and discrete semiconductors for use in data and power management. The stock added 3% to recent gains this week on little news. ON Semiconductor is keeping a tight lid on costs and remains leveraged to an eventual economic recovery.

Stewart Enterprises (STEI:Nasdaq; $7.33; 500 shares; 2.72%; Stealth Stock): The company is a leading operator of funeral homes and cemeteries. The shares ticked lower this week, ahead of the company's next quarterly report, which is scheduled for Monday. We'll provide readers with a full preview of the numbers early next week, but we're expecting another solid report from management. The stock offers a 2.2% dividend yield and can continue to outperform in a volatile trading environment.

SunOpta (STKL:Nasdaq; $5.96; 700 shares; 3.09%; Stealth Stock): This producer of natural and organic food products also operates a joint venture that recycles industrial waste and makes cleaning products. It was a quiet week for the stock, which fell 3%. The stock is reasonably priced and the company remains leveraged to continued growth in demand for natural and organic foods.

Swift Transportation (SWFT:NYSE; $8.68; 550 shares; 3.54%; Inflection Point): Swift is a trucking company that transports goods throughout the U.S. and Mexico. The shares dropped 2% this week, even though Dahlman Rose upgraded Swift from Hold to Buy on Monday. The company is on track to expand margins and pay down debt in the coming quarters, and we maintain the stock can move up toward the double digits over the coming months.

Vantage Drilling (VTG:Amex; $1.73; 4,400 shares; 5.64%; Inflection Point): This offshore driller contracts its rigs for the exploration of oil and natural gas. The stock ticked lower this week, but remains attractive to purchase on the next market pullback. The company's fleet is fully booked for 2013 and management can deliver the first annual profit in Vantage's history. We believe the shares have 20% to 30% upside potential over the next six months.

Yamana Gold (AUY:NYSE; $17.39; 250 shares; 3.22%; Inflection Point): Yamana is a gold and copper exploration company with seven operating mines and several ongoing development projects in Brazil, Argentina and Chile. We bought 75 shares on Thursday, as the shares fell another 2% this week. We also raised our rating on the company from Three to Two. The stock had dropped 15% from its recent highs and we bought back the same number of shares we sold last month over $20. Yamana is poised to deliver above-average production growth over the next several quarters and we believe that shares can trade back up through $20.

Zix (ZIXI:Nasdaq; $2.69; 2,000 shares; 3.99%; Stealth Stock): The company is a leading producer of email encryption software that enables doctors to automatically send information to pharmacies. It was a quiet week for the stock, which ticked lower. Zix is carrying a lot of sales momentum into 2013 and we believe the stock has 20% upside potential over the next six months.

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