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7 Stocks Under $7

Low prices and solid fundamentals make for a winning combination

By InvestorPlace Experts

Get Lucky With These Cheap Stocks

Slot Machine 777Stocks may finally be staging a comeback after a very rocky start to June. And investors might be tempted to rush headfirst into the markets to scoop up cheap stocks before all the bargains are gone.

But just because a stock is cheap does not mean it is a good buy. What you need is the winning combination of a cheap stock with solid fundamentals and a little bit of luck in the form of a market rally.

So we’ve put together a list of seven stocks trading under $7 that we feel are some of the best investments for the market’s next leg up. Here are seven cheap stocks to buy now:

Cheap Stock to Buy #1 – Wendy’s/Arby’s Group (WEN)

Wendy's/Arby's Group (NYSE: WEN) Hilary Kramer, Editor, Breakout Stocks Under $5

Fast food franchisor Wendy’s/Arby’s Group (NYSE: WEN) rallied after its most recent earnings report revealed some optimism on the hoped-for sale of Arby’s and promising new hamburger offerings, but it has since given back all of those gains and more on overall market weakness.

I continue to feel the company is getting back on the right track with its menu changes (its new fries have already been well received), which will increase customer traffic. I like the stock at current prices and expect some of these catalysts to have more of an impact in the second half of the year. There remains the possibility as well that Wendy’s will get acquired.

Cheap Stock to Buy #2 – Lattice Semiconductor Corp. (LSCC)

Lattice Semiconductor Corp. (NASDAQ: LSCC) Nancy Zambell, Editor, Buried Treasures Under $10

A survivor of the tech boom and bust cycle, Lattice Semiconductor Corp. (NASDAQ: LSCC) has managed to consistently grow its new product revenue by 28% per quarter since 2006. And that astounding figure includes one of the worst recessions in our history, as well as a downturn in the semiconductor market. The company’s primary customers are original equipment manufacturers (OEMs) in the communications, computing, consumer, industrial, automotive, medical and military end markets. Its strongest markets include the fastest-growing segments in our economy today.

LSCC intends to focus on aggressively expanding its mid-range markets, as well as its products for lower-power, lower-cost applications. It also plans to continue targeting customized solutions for its customers, all the while, continuing to increase its flow of new product growth and entry into new markets.

Cheap Stock to Buy #3 – Majesco Entertainment (COOL)

Majesco Entertainment (NASDAQ: COOL) Louis Navellier, Editor, Emerging Growth

Majesco Entertainment (NASDAQ: COOL) is an innovative provider of video games for the mass market, developing a wide range of titles for Sony’s PlayStation, Microsoft’s Xbox and Nintendo’s WII systems. On June 7, COOL announced that it had signed a contract with the NBA to begin development of an original video-game basketball franchise. The stock rose an impressive 32% over the next five trading days while the broader market sold off.

However, the stock is down today after reporting weaker-than-expected second-quarter earnings last night, missing consensus earnings estimates by 2 cents. Majesco reported net revenues of $32.1 million for the second quarter ended April 30, 2011, compared with $10.9 million reported for the same period in the previous year. The company’s operating income for the second quarter was $5.3 million, compared with an operating loss of $1.6 million reported for the same period in the previous year. So treat this sell-off as a buying opportunity.

Cheap Stock to Buy #4 – Lannett Company (LCI)

Lannett Company Inc. (AMEX: LCI)

Nancy Zambell, Editor, Buried Treasures Under $10

Lannett Company (AMEX: LCI) develops, manufactures, markets and distributes generic versions of pharmaceutical products in the United States. From 2009 to 2010, Lannett saw a 10% expansion in prescriptions for its products, and its best-selling product, Levothyroxine Sodium, indicated for thyroid deficiency, grew 16% during that period. That drug was recognized by IMS Health as the 18th most-prescribed pharmaceutical product, including both branded and generic products, in the United States during the past year, reaching approximately 23 million prescriptions through June 2010.

The company may have some good news coming in just a couple of weeks. The Food and Drug Administration (FDA) has issued a revised goal date of June 23 to approve the company’s new drug application for its Morphine Sulfate Oral Solution. I have been waiting for this and the market is anticipating approval.

Cheap Stock to Buy #5 – Popular (BPOP)

Popular (NASDAQ: BPOP) Hilary Kramer, Editor, Breakout Stocks Under $5

Popular (NASDAQ: BPOP) provides a range of retail and commercial banking products and services in Puerto Rico, the United States, Venezuela, the Dominican Republic, El Salvador and Costa Rica. The stock has dipped along with the entire banking sector, but as is often the case when sentiment is negative, I think investors have overreacted and knocked it down too much.

Potential improvements in the Puerto Rican economy should help it bounce back, as well as clarity on the company’s recent decision to pull out of an agreement to sell non-performing construction loans. It’s important to note that Popular has already successfully sold a lot of its troubled loans, and the company’s capital levels are solid, which puts it in good position for a rebound once conditions improve.

Cheap Stock to Buy #6 – Web Media Brands (WEBM)

WebMediaBrands Inc. (NASDAQ: WEBM)Hilary Kramer, Editor, Breakout Stocks Under $5

Web Media Brands (NASDAQ: WEBM) is an Internet media company that provides content, education, trade shows and online job board services for media and business professionals primarily in the United States. The stock has been hit hard in the past few weeks, pulling back nearly 26% since hitting the top end of its 2011 trading range a month ago. The stock is back near where it found support during March’s brief market sell-off.

The social networking company is a good play on a sector recently brought back into the spotlight thanks to LinkedIn’s much-anticipated IPO. Web Media’s impressive marketing products, including applications with Mediabistro and Facebook, should continue to be good revenue producers.

Cheap Stock to Buy #7 – First Busey Corp. (BUSE)

First Busey Corp. (NASDAQ: BUSE)Nancy Zambell, Editor, Buried Treasures Under $10

I think small regional banks are set to make a comeback, and in this space I like Illinois-based First Busey Corp. (NASDAQ: BUSE). The bank has had its share of problems, as Illinois was one of the largest hubs of banking problems in the nation during the financial fallout. And BUSE borrowed $100 million TARP funds, which it hasn’t yet paid back in total, but it is making great progress toward that goal.

The company beat estimates in the last four fiscal quarters, and institutions are ramping up their ownership. Additionally, this cheap stock pays a nice little dividend of almost 3.3%. As the regional baking sector recovers, I think BUSE will be a leader.

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