Yes... I know this, because I have been in the game for over 30 years, and I have seen this pattern over and over again and, as your investing coach, I am teaching you how to find the "best of the worst" in tech... the lowly names that are still worth buying as speculation...

You know that, every day this week, I've been adding another tech stock name... a tech spec... so that, by Friday night, you'll have five... enough to put them all in a basket... which we like to use when we're playing with dangerous speculative names, because it spreads out the risk... a couple of them could implode... and, as long as we catch one big win, you'll still have a hefty gain like we did at the end of the year. Remember that big basket that we put together?... Boom! Big money.

Alright... Now we've already had a big win in the original tech spec... which was TSM. I recommended that on March 11th, at $8.66. It is now up 27%. So I got your attention, right?...

Tonight's tech spec?...

I cannot believe I am about to praise this Ursa Canine, "are you ready, skee-daddy" name...

Cadence Design Systems Inc. (CDNS)!...

Cadence designs systems which I have not owned since I had my hedge fund, probably in 1998... It's been years in purgatory, and we're changing that right now!

Alright... this is a $5 stock... It's in the business of electronic design automation... EDA... that could be the son of Taiwan Semiconductor or, at least, a cousin once removed... Basically, Cadence makes the hardware and software tools that help semiconductor companies design and manufacture new products... so most of its sales are largely tied to R&D... research and development spending for the chipmakers.

Don't think of Cadence as a semiconductor equipment, though... You know I'm not that crazy about those... I want you to think about it as a play on our love and need for better and better gadgets, which we know is coming right out of China... where they are gadget hungry... because you get a coupon to buy a lot of gadgets there... Now that's my kind of plan...

As devices like cellphones become more complex, and take on more functions, the chipmakers have to create new components that are smaller, better and faster. Cadence sells them the tools they need to design these components. Business is sticky, without a whole lot of competition. 99.9% of electronic design contracts that are renewed go to the company that already had the contract. Cadence isn't in danger of seeing its customers get picked off by another company... That's one thing you don't have to worry about, if you own the stock...

Alright, if that's so great, what the heck is it doing down here?... Why? Well there's a reason why Cadence is speculative, and it's incredible...

No company ever wants its stock to go to $5, and you don't trade in the single digits for doing well... Yeah... something's wrong, right? You get there by screwing up... I've got to tell you something... Cadence is a classic example of the screwup...

At the beginning of 2008, Cadence was at $16.93... $16.93 at the beginning of 2008, and then it had fallen to $3.66... It's back nicely from the bottom but, to me, it still has a long way to go...

Mutual fund buyers don't care about how much stocks have rebounded off the bottom... they care about how far they've fallen. To them, Cadence isn't up huge from its low, it's down gigantically from almost $20 bucks. That's what intrigues them, pulls them in... and, now that they've watched this segment, believe me, they'll be pulling the books... and say, look at this Cadence... Cramer's right...

Anyway, sometimes you get a broken stock that's attached to a company that's still in tact and undamaged. That wasn't Cadence... Last year, the company was a mess...

Now, in 2007, Cadence was a profitable company with operating margins of 30.5%. In 2008, it managed to become a money loser, with an operating margin of -3%. I mean, these are all bad... everything I'm about to tell you is bad... That's not the least of it... Cadence's management team... fired!... It fell behind on its SEC filings, thanks to a probe over revenue recognition... a delisting notice from NASDAQ... a result of its inability to file a 10-Q for the September quarter... It gets worse! In July, it changed the way it accounts for its revenues... Previously, it booked 50% of product fees up front... and 50% being recognized rabidly over the term of the contract... but they switched to book just 10% up front, and 90% over the term of the contract. That's how it should have been.

All they did was change the way they handled the books, but this made the numbers look a whole lot worse than they really were. Cadence changed from one system to another... which helped hammer the stock. You'd think the investors - especially the pros - wouldn't care, since everything is the exact same numbers that they reported, but that would be wrong. They mostly just look at the headline numbers, which make it look like business was down huge.

Now, though, Cadence has started to turn things around, and no one's paying attention... Pay attention! The expectations are still incredibly low. When it reported its first quarter on April 29th, Cadence beat the Street's consensus by 2 cents. I couldn't believe it could do it.

Even though it's still losing money, there are signs of a turnaround in execution. The mid-point of management's guidance for the June quarter implies that its revenues and operating margin will increase from the previous quarter... Great news. Next quarter, the company laps that change in revenue recognition... Its results will be apples-to-apples... Cadence gets a $150 million operating expense benefit in 2009, and cut its workforce by 12%... bad for workers, good for shareholders...

You don't buy a stock like this unless I've got something even more "Billy May" style!... You won't regret this!...

Anyway, you've got downside protection...

Cadence has $2.20 of cash and equivalent... Remember, this is a fiver (i.e., a $5 stock)... so it would be tough for the stock to fall more than $3 bucks if it doesn't work.

There've also been some insider buying from the chairman... hey, like maybe he knows something, right?... who's also the recently-appointed CEO... The CFO bought $270,000 of his own stock. You only buy it for one reason, which is you think the stock's going to go up... You sell for many (reasons)... you buy for one...

Here's the bottom line...