Related topics: stocks, retail, investing strategy, cheap stocks, Michael Brush

The market has been in rally mode, but values remain in sub-$5 stocks with clear reasons for an upturn or turnaround.

We'll start with Heelys (HLYS, news), which makes those wheeled shoes that were once the rage. Recession hit just as the fad faded, and many retailers got stuck with excess supplies.

But most of that inventory is gone now, and Heelys is under new management and rolling out new designs and products. The HX2 is a Heely with two wheels for beginners. The Nano is a small skateboard that attaches to your shoe.

If this plan works, Heelys stock could triple or more from a recent price of $2.70, believes Eric Marshall, a co-portfolio manager of the Hodges Small Cap Fund (HDPSX), which has soundly beaten competing small-cap funds in the past year. The company's $2.50 per share in cash protects investors.

THQ: The game is on

THQ (THQI, news) has wowed gamers for years with hits like "WWE SmackDown vs. Raw" and "Saints Row." Lately, it has disappointed, with big losses and fewer new releases. But that's about to change, judging by a recent round of stock purchases by insiders.

This holiday season, THQ should get a boost from its uDraw drawing tablet, for Wii gaming consoles. There's also a new title in its World Wrestling Entertainment franchise, with more new games due out early next year.

THQ may look woozy now, but it's not down for the count. (As with all 10 of the stocks featured here, I caution against buying this one if it moves more than 5% above Nov. 9's closing price.)

Joe's Jeans: Fashion trumps recession

Times are tough, but that hasn't stopped "fashionistas" from buying $165 jeans or $65 T-shirts. Just look at sales growth at Joe's Jeans (JOEZ, news), which sells upscale jeans, T-shirts, shoes and accessories through its own boutiques and premium retailers such as Nordstrom (JWN, news). Sales advanced 20% in the most recent quarter, pretty much par for the course.

"They've been growing exponentially throughout the recession," says Marshall, of the Hodges Small Cap Fund. Such rapid growth in sales brings to mind True Religion Apparel (TRLG, news), a retailer whose knack for moving pricey jeans lit a fire under its stock earlier this decade.

Continued rapid sales growth and new Joe's Jeans stores could triple the size of this company or more with time, sparking a comparable move in its stock, Marshall says.

Advanced Battery: Charged up

If all-time investing great Peter Lynch were still managing a mutual fund, he just might take a liking to Advanced Battery Technologies (ABAT, news), which makes rechargeable polymer lithium-ion batteries used in consumer electronics and vehicles.

Lynch preferred rapidly growing companies with cheap stock prices. This company fits the bill with projected earnings growth of 37% a year for the next three to four years and a price just nine times earnings, according to Validea, which produces market-beating returns by programming computers to imitate investing gurus such as Lynch.

Wall Street analysts believe Advanced Battery stock could trade up to $6 in a year, from recent levels of around $4.

Northgate Minerals: New digging

Northgate Minerals (NXG, news) is the Rodney Dangerfield of gold mining stocks. It gets no respect. But soon Northgate will command it.

While many investors focus on near-term declines in gold production, the key here is recent Canadian approval of the development of huge gold deposits at a Northgate project called Young-Davidson in Ontario.

Production should start in the first half of 2012 and fully ramp up by 2014. This plus other projects could raise profits and make this stock double or more, believes Thomas Winmill of the Midas Fund (MIDSX). Northgate is one of his fund's largest holdings, and Winmill has shared big winners under $5 in the mining sector with us in the past.