By Stockpickr Staff
Updated at 12:57 p.m. EDT on April 13, 2009

In the early 1940s, famed value investor Sir John Templeton bought 100 shares of each publicly traded company trading for less than $1 per share. At the time, the economy was in a depression, employment was out of control, and the stock market was a scary place for investors.

Fast-forward four years and Templeton was up more than 400% on his investment, solidifying him as one of the greatest value investors of all time.

As the brutal bear market takes its grip throughout the world's economies and a record number of stocks are now trading below $1 per share across various indices, we are going to attempt to replicate Sir Templeton’s strategy. The goal here is not to find stocks that could go up 20% or even 50% but to find stocks that could go up 500% to 1,000% in relatively short order.

Such a task is never easy, but with a little bit of luck and a lot of hard work, these depressed, beaten-down stocks could yield Templeton-esque returns.

This week's under-$1 pick is software solutions provider Selectica (SLTC). Its software products allow companies to operate more efficiently internally, enabling them to automate, link, track, report on and optimize critical business functions.

When you’re checking out from a 7-Eleven, do you ever wonder how the store instantly updates its inventory? That’s Selectica software, which operates in more than 5,800 7-Eleven stores nationwide.

Selectica's contract management business, which enables customers to create, manage and analyze contracts in a single, easy-to-use repository, is cash-flow-positive right now

The company's sales configuration business, which simplifies and automates the configuration, pricing and quoting of complex products and services, will be cash-flow-positive by the fourth quarter of 2009 or, in a worst-case scenario, the first quarter of 2010, according to Selectica's latest conference call.

Selectica is diverse, and its clients span all industries and sectors. Its largest clients include IBM (IBM), which provides 10% or more of Selectica's total revenue, as well as GE's (GE) health care division, Cisco (CSCO), Aetna (AET), Coors (TAP), Abbott Labs (ABT), Juniper (JNPR) and 7-Eleven.

Currently, Selectica has a market capitalization of just $25 million, of which about $21 million is cash sitting in the bank. As such, the market and investors are assigning only a $4.2 million dollar valuation on Selectica's business, proprietary software solutions, and clients.

Interestingly enough, Selectica also has a $3 per-share tax loss carry-forward, meaning that once it turns profitable (In the fourth quarter of 2009 or the first quarter of 2010), up to $150 million in profits will not be taxed by the U.S. government. To a potential acquire, this may only sweeten its offer to buy the company.

In 2006, Trilogy, a privately held software company, bid $4 per share for Selectica. A month later, Selectica’s board rejected the offer, citing that it was not in the best interest of its shareholders. In December 2008, Trilogy started to rapidly accumulate shares of Selectica in the open market, and it now owns a 6.7% stake, or 1.9 million shares, with a cost basis of 96 cents per share. Trilogy disclosed that it had previously made various proposals to acquire Selectica. At the time, this offer was widely regarded as a 40% premium to Selectica's 60-cent closing price, suggesting a $1 or so per share just in December alone.

Activist investor Steel Partners owns 14.7% of Selectica, or roughly 4.3 million shares, with an average price of $1.77 per share. Steel has also hinted of a possible buyout of Selectica.

On April 7, the company sold its India subsidiary for $4 million to Trinity Management, a New York-based investment fund that focuses on making investments in India. Additionally, according to Selectica's recent conference call, the company is now entering into a six month consulting relationship with investment bank Jefferies regarding the possible sale of either units or the entire company. Logical buyers include Trilogy and IBM (IBM).

Trading near its net cash in the bank -- on Tuesday afternoon, it was trading up 4 cent, or 8.7%, at 50 cents a share -- Selectica is on sale.