Looking at small cap plays heading in 2010, the list has shrunk significantly from those available at the beginning of 2009. You can thank a series of bankruptcies followed by a strong rally for eliminating many small cap names, regardless of the underlying quality. After some digging, a few gems still remain that could finally get their due after surging through the rally.

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Cheap Oil

While many oil companies surged in 2009, Harvest Natural Resources (NYSE:HNR) looks incredibly cheap on a host of levels. Shares fetch at $5.26 while the balance sheet is debt free and contains nearly $1.50 per share in cash. The company has a rich reserve base, with proven reserves equally to nearly twice the market cap.

Factor in probable, possible and the exploration upside and you get an equity value of over $20 a share. So why is Harvest so cheap? In a word, Venezuela.

Currently the company's principal operations are in the high-risk demographic region of Venezuela. Keep in mind Harvest is a U.S. based company and over the years has bought up working interests all over the world. Back in 2008, the company signed a landmark agreement with the Venezuelan government which was seen a significant achievement.

Venezuela continues to weigh on Harvest's stock price. It wasn't long ago that the country forced majors like ConocoPhillips (NYSE:COP) out of the country. However, at the current share price, any further Venezuelan risk is more than discounted.

Paying the Taxman
Jackson Hewitt
(NYSE:JTX) is the second-largest preparer of income tax returns after giant H&R Block (NYSE:HRB). But compared to HRB, Jackson is a tiny fish. At $3.45, shares are down from over $35 a couple of years ago. Now the company has a new CEO, incidentally from H&R Block, and the company seems headed in the right direction. Shares trade at less than five times earnings.

Jackson has had some problems with franchisees and competition from H&R Block is stiff, but the current share leaves room for huge upside if the company can continue to execute. Jackson Hewitt has a relationship with over 1,800 Wal-Mart (NYSE:WMT) locations, clearly a sign that the company is not falling apart. (Think you have what it takes to be chief executive? Find out what those at the top have in common. Read Becoming A CEO.)

Heads You Win, Tails You Lose Little
Investing in names currently out of favor with Mr. Market can lead to significant returns when and if they again become favored. Names like Harvest and Jackson-Hewitt are clearly out of favor now, and while it's not a guarantee that something will change this perception anytime soon, they both are clearly headed in the right direction.

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