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Ever been at a summer barbeque and have this conversation?

"Hi, do you buy stocks? I know this stock that's a sure winner. It's only $1. It's in plastics in Brazil. Expected to triple in the next year. You should get in now. I just bought some."

Who doesn't love a "cheap" stock?

By cheap I mean a stock trading under $10 a share. There is a lure to buying one of these stocks because there's something powerful to buying a bunch of shares for your money.

In your head you think, "for just $1000, I can buy 1000 shares of that stock. Imagine that? A thousand shares."

It just sounds cool.

And then there are the dreams of riches when thinking of how easily it could double or triple. After all, how hard is it for a $5 stock to go to $10? Of course, it's the same as a $40 stock going to $80- but our mind doesn't think that way.

However, unless you want to keep getting your tips from the guy at the barbecue, how do you separate the "good" stocks under $10 from the "bad"?

Use The Zacks Rank To Find Great Stocks

Earnings and earnings growth separate the men from the boys in the world of stocks.

By using the Zacks Rank, it's easy to find stocks that have rising earnings estimates. Look for Zacks #1 Rank (Strong Buy) and #2 Rank (Buy) stocks, both which will have rising earnings estimates.

Then, narrow it down further to find those stocks that are highest ranked, have double digit earnings growth AND are profitable. And, of course, they all have to be under $10.

They do exist!

5 Top Zacks Rank Buy Stocks Under $10

With my criteria, I had no trouble putting together a diverse mini-portfolio of stocks under $10.

You may be familiar with some of these companies and others may be new. But they each have the following in common:

1. A Zacks Rank of #1 (Strong Buy) or #2 (Buy)
2. Double digit earnings growth

1. Steelcase (SCS - Snapshot Report)

Steelcase makes office furniture and interior architecture items like moveable walls and space dividers. The company is celebrating its 100th anniversary this year.

As an added bonus, shareholders are getting a 4% dividend yield.

Stock trading at: $9.40
P/E: 12.2
Fiscal 2013 EPS growth expected to be 31%
Zacks #2 Rank (Buy)

2. Hawaiian Holdings Inc. (HA - Snapshot Report)

Hawaiian Holdings operates Hawaiian Airlines, the longest operating airlines in Hawai'i currently in its 83rd year. It flies 170 daily flights between the islands as well as to 11 cities on the mainland.

Stock trading at: $6.09
P/E: 3.9
2012 EPS growth expected to be 86.1%
Zacks #2 Rank (Buy)

3. OMNOVA Solutions (OMN - Snapshot Report)

OMNOVA makes emulsion polymers, specialty chemicals, decorative laminates and upholstery (remember those school bus seats?).

Stock trading at: $7.62
P/E: 10
2012 EPS growth expected to be 35%
Zacks #2 Rank (Buy)

4. Kona Grill (KONA - Snapshot Report)

Kona Grill operates 23 restaurants in 16 states. Sushi sales make up 54% of the company's sales so it is less impacted by rising commodity costs compared to other restaurant chains which may be corn or grain sensitive. In the second quarter, it grew same-store sales for the 7th consecutive quarter. Margins also grew.

Stock trading at: $8.28
P/E: 15
2012 EPS growth expected to be 77%
Zacks #2 Rank (Buy)

5. Outdoor Channel Holdings Inc. (OUTD)

Outdoor Channel operates the hunting, fishing, adventure cable channel "Outdoor Channel" which is in 38 million households. You might know its popular Major League Fishing show which boosted advertising revenue by 19% in the second quarter. Sales jumped 10% in the second quarter. The company also has little debt.

Stock trading at: $6.93
P/E= 57.4
2012 EPS growth expected to be 71%
Zacks #1 Rank (Strong Buy)

Buying Stocks Under $10 Is Fun

Not all stocks under $10 are created equal. Use the Zacks Rank and other solid fundamentals to separate the "good" from the "bad."

These 5 Zacks Rank Buy stocks, however, prove that investors can find stocks under $10 with strong earnings growth and a history of producing profit for shareholders. In the case of Steelcase, you have a track record of 100 years.

But don't stop with just these five. There are others that also fit the criteria. Don't limit yourself.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

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