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Taking Stock: Seven cheap stocks purely a speculative buy

Malcolm Berko: I know bupkis about cheap stocks. But Big Jack, an on-again, off-again acquaintance of mine who was a low-level big shot at Merrill Lynch when John “The Pain” Thain was chosen as CEO, is a recognized certifiable cheap stock genius, or CCSG.
By Malcolm Berko, For The Oklahoman Modified: July 25, 2014 at 5:11 pm •  Published: July 27, 2014
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Dear Mr. Berko: I purchased 2,000 shares of Synovus Financial in January 2012 at $1.49 on your recommendation. I now have 287 shares at $24 and a nice profit ($3,908) after a 1-for-7 reverse split. Please tell me (my broker is a dolt) whether I should continue to hold the stock or take a profit. Could you also recommend a half-dozen stocks that are less than $10 and could run up as this one did?

GH, San Antonio

Dear GH: I know bupkis about cheap stocks. But Big Jack, an on-again, off-again acquaintance of mine who was a low-level big shot at Merrill Lynch when John “The Pain” Thain was chosen as CEO, is a recognized certifiable cheap stock genius, or CCSG. In fact, Big Jack is the only ex-Merrill executive to hold this coveted CCSG designation, which is the industry’s equivalent to a CFA, CFS, NUT, CIC, CIMA and RIS combined. And you have Big Jack to thank for your sweet gains in Synovus (SNV-$24), which opened its vault doors in 1888. Big Jack believes that SNV should be held for a much higher target price (he’s looking for $56) in the coming four years. He also thinks the dividend could easily triple in that time frame, to 90 cents a share.

Here are Big Jack’s other el-cheapo recommendations, though I’m compelled to tell you that I have not spoken to a single person in management at any of the following seven terribly speculative issues.

Zynga (ZNGA-$3.09) is the second-largest player in the business of mobile games for stupids. Jack believes that the new CEO, ex-Xbox chief Don Mattrick, has the moxie to move ZNGA to $9 in the next 24 months.

Dice Holdings (DHX-$7.39) is a profitable online recruiter specializing in security clearance, tech, energy and finance positions. The company should earn 41 cents a share this year, and as the economy improves, DHX could double earnings by 2016.

S&W Seed (SANW-$6.16) is a seed company that produces the highest-yielding seed for non-dormant alfalfa (the kind grown in arid climates) and hay-flavored forage for beef and dairy cattle. SANW is experimenting with the stevia plant, which produces a noncaloric sweetener that may be as tasty as real sugar, and Jack believes this could be a blockbuster.

Kratos Defense & Security Solutions (KTOS-$7.27) — which tripled its revenues in the past four years, to $970 million — derives the bulk of its business from Uncle Sam, managing cybersecurity and electronic warfare/attack solutions and intelligence. Earnings next year could grow fourfold, to 60 cents, and Jack believes that KTOS is an attractive takeover candidate.

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