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The market paused for breath in June, falling 3.8%. After the huge run up we've had since the market bottomed in March, the setback is not altogether surprising.

It's worth remembering the FTSE 100 index of the UK's leading shares is still down 23% over the past 12 months. These remain difficult times for investors.

As to what's next for this market, who knows? Will it surge even higher from here, perhaps testing 5,000, or will it slump back to 3,500, plunging us all into a depressive state? Answers (ANSW - news) in the comments box below, please

Anyway, as ever, there were some bright shining lights. If you'd bought these five cheap shares near the beginning of June, you'd be cheering from the rafters.

The Shares You Should Have Bought

Obviously a one-month time period is a rather short space of time over which to measure investing success. Share price gains could be due much more to luck than to good management. But whatever the reason, investors in those five companies won't be complaining!

Why Such Juicy Gains?

So why did the companies listed above move so much in just a one month period?

Imagination Technologies designs, develops and markets multimedia technology. The company has been making good progress, having announced in June that profits had jumped 56%.

Whilst that is impressive growth in these tough economic times, it seems the real excitement in the share price may have come from both Intel (NASDAQ: INTC - news) and Apple (NASDAQ: AAPL - news) increasing their stake in the company. Intel now owns 16% of Imagination Technologies and Apple 9.5%. Obviously the market is thinking 'takeover', pushing the shares up to the heady heights of 150p during the month.

Simply based on the interest by those American giants, you would have to assume Imagination Technologies has some attractive intellectual property amongst its product range. Still, the shares are certainly not cheap, trading on a forward P/E of over 40. Personally, I never buy a stock on the premise it might get taken over.

Bollywood Meets The City

Eros International is a global player in the Indian entertainment. It has a business model built around the release of 30 to 40 new films every year and the exploitation of a valuable film library containing more than 1,900 titles.

The company has just released annual results, posting a 39% increase in turnover as its television business revenue nearly doubled, driven by syndication deals with Indian satellite broadcasters and sales in dubbed markets.

The share price also jumped higher in June prompted by broker Evolution Securities repeating its buy rating, saying Eros will benefit from what appears to be a deal between Bollywood producers and Indian multiplexes.

Based on Evolution's earnings estimates, Eros trades on a forward P/E of just 5. The company has strong operating margins and I like the 1,900 string film library. Definitely this is one Bollywood production to keep your eye on.

An Exchange For Climate Change

Climate Exchange owns the leading carbon exchanges in the US -- the Chicago Climate Exchange and Chicago Climate Futures Exchange -- and the London-based European Climate Exchange. The company has been growing at a furious pace, obviously benefiting from the global trend towards reducing carbon emissions, now including the US.

During June Climate Exchange shares jumped 44%, also benefiting from news that US-based IntercontinentalExchange (NYSE: ICE - news) had bought a 4.8% stake in the company -- sparking speculation of a takeover attempt. The shares are very richly valued, but they operate in a very attractive industry. If only they were a little cheaper

Immunodiagnostic Systems, the producer of diagnostic testing kits, makes another appearance in this list, having first appeared in the list of shares you should have bought in March. Back then, the shares finished the month at 189p. They now trade at 323p. I previously said "There is no shortage of hype surrounding this company, but it might be one of the few small biotech companies that looks capable of delivering on its potential." If only I'd followed my own advice

Finally, boring old polymer chemicals company Yule Cato, complete with the boring old name, said in June it expects full-year profits to be ahead of forecasts and an improvement in trading conditions to continue in the second half.

The shares hit a low of just 39p during the March Massacre, but now trade back up at over 100p. The company looks cheap on many measures, including a forward P/E of under 7 and a low price-to-sales ratio, but beware its £160m in debt. I have my doubts as to whether the shares will gain too much more in the months ahead.

Finding The Shares That Might Take Off In July

What does all this prove? Two things

1) Share prices can take off, sometimes unexpectedly, at unexpected times, and by surprisingly large percentages.

2) Patience is required. Some of the companies mentioned above have seen their share prices absolutely hammered from their 2007 and 2008 peaks. But all need not be lost. Just because a company has lost 80% or 90% of its value, doesn't mean it can't rise from the ashes and enrich investors who were brave and skilful enough to buy when all about them were panic selling.

If you are looking for cheap shares that might be about to take off in July and beyond, look no further than The Motley Fool's Champion Shares premium share picking service. A free 30-day trial, available via www.fool.co.uk gives you instant access to all Maynard Paton's current buy recommendations.

> Sadly, Bruce Jackson didn't own any of the companies mentioned in this article at the beginning of June and nor at the end of June, although he does own shares and is short call options known as a covered call in Intel.