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Three top stock picks from Contra The Heard’s Benj Gallander

Benj Gallander of the Contra Guys.

Tibor Kolley/The Globe & Mail

Benj Gallander is president of Contra The Heard Investment Letter. His focus is contrarian investing.

Top Picks:

United Security Bancshares (USBI-Q)

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This small Alabama-based bank pays a dividend of 2 cents quarterly. At one point, it paid 30 cents quarterly. The current stock price is under $10 and further recovery is likely. It used to trade above $30.

Innodata (INOD.Q)

This is the second time that I have owned this stock. The first time, it was bought at $2.50 and sold at $6.44. The balance sheet features a reasonable amount of cash and nominal debt. Insiders own about 5 per cent.

First United Corporation (FUNC-Q)

FUNC sells for less than book value and did not dilute the share count during the recession. I suspect that the company will likely reinstate a dividend before the end of next year. It used to pay 20 cents a quarter. A double in share price is not out of the question as the stock used to trade above $25.

Past Picks: Sept. 18, 2015

Extendicare (EXE-T)

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Still Holds.

Then: $8.05 Now: $9.15 13.66% Total return: 20.03%

Rona Preferred Share A (RON.A-T)

Still Holds.

Then: $13.87 Now: $23.99 72.96% Total returnR: 73.80%

Jinpan International (JST.O)

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Sold in April on the takeover at $6.00.

Then: $3.76 Now: $5.94 57.98% Total return: 57.98%

Total Return Average: +50.60%

Market outlook:

While there have been minor bouts of volatility over the past year, I suspect that it will ramp up dramatically over the next year. Investors should be aware of this, but not necessarily wary. Volatility can be a friend if one reacts selectively and does not get swayed by the noise.

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