An ultra-low-cost Korean steel company in which Warren Buffett invested -- Posco (NYSE: PKX) -- is looking like a bigger bargain in this turbulent market. Buffett may have acquired much of his 3.49 million share -- or 4% -- position (as of March 2007) in 2005, when Posco -- the world's third largest steel company -- shares were low -- bottoming at $44 in June of that year -- due to anxiety over rising competition from Chinese steelmakers.

Buffett inspired me to take a look at Posco which I recommended in The Cohan Letter back in February 2007 when it traded at $92.70 -- it's up 45% since then. I liked it in February because at a Price Earnings to Growth (PEG) ratio of 0.6 -- on a P/E of 6.8 it looked cheap relative to its forecasted 12% earnings growth to $10.05 in 2007 (the 2007 forecast has since been raised 10% to $11.02). Posco peaked at $154 on July 23rd and is down 16% since then.

So why does Posco look cheap now? Its strength is derived from infrastructure development and automobiles in Korea, China and India which spurs demand for Posco's products. This demand is not likely to decline in the face of market volatility. And at a P/E of 11.1, Posco looks like even more of a bargain than it did in February -- trading at a PEG of 0.4 on 27.3% earnings growth to $14.02 in 2008.

If Posco drops further and its earnings growth remains high, Bufett could back up the truck. And perhaps, so should you.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Posco.

See all the posts in this special report:

• Volatile Markets: 11 stock plays for turbulent times
• Volatile Markets: Stick with General Electric (GE)
• Volatile Markets: Huaneng Power (HNP) is my pick for the next 50 years
• Volatile Markets: Target (TGT) is the retailer of choice
• Volatile Markets: Bank of America (BAC) offers low risk, high reward
• Volatile Markets: Starbucks (SBUX) is ready for a comeback
• Volatile Markets: Coca-Cola (KO) is the Real Thing
• Volatile Markets: Bet on Boeing (BA)
• Volatile Markets: Ride FreightCar America (RAIL)
• Volatile Markets: Anadarko Petroleum (APC) has valuable fuel reserves
• Volatile Markets: Dip makes Posco (PKX) a bigger bargain
• Volatile Markets: Steven Madden (SHOO) will wear well
• Volatile Markets: Precious metals are the safest place to be
• Volatile Market: Just ignore it; don't try to time it