The editor of Cabot Benjamin Graham Value Letter explains, "We believe these six companies offer excellent appreciation potential at reasonable prices: Lululemon Athletica (LULU), Mindray Medical (MR), Potash (POT), Seagate Technology (STX), Silver Wheaton (SLW) and Telefonica SA (TEF)."
Ward continues, "Lululemon founded in Vancouver, BC, makes athletic clothing for yoga, dancing, running and other active endeavors. The company sells women's pants, shorts, tops, and jackets in 106 company-owned and 13 franchised stores in Canada, the U.S., Australia and Hong Kong.
"Lululemon's sales increased 25% and EPS soared 34% during the 12 months ended 1/31/10. We expect similar increases during the next 12 months and beyond.
"The share price, as measured by P/E, is expensive, but the company's exciting growth potential provides an advantageous investment opportunity. Buy.
"Mindray Medical International is the leading developer, manufacturer and marketer of medical devices in China. Products include patient monitoring devices, diagnostic laboratory instruments and ultrasound imaging systems.
"Low production costs enable the company to compete effectively in 140 countries. The superior research and development department creates many new products, enabling the company to diversify.
"Mindray will likely score big sales gains in China and other emerging markets while hospital spending in the U.S. begins to recover. MR's price-to-earnings ratio of 23.3 is quite sensible when compared to our forecast for exceptional 23% EPS growth. Buy.
"Potash Corp. of Saskatchewan, based in Canada, is a leading producer of potash, nitrogen and phosphate fertilizers and other products. Nutrient depleted and neglected soil will require increasing amounts of fertilizer during the next several years. Potash suffered from weak demand and low fertilizer prices in 2009.
"Fertilizer demand and prices are beginning to pick up noticeably in 2010, which will lead to a doubling of EPS and strong growth thereafter. POT shares sell at a bargain price of 18.6 times forward 12-month EPS. Buy.
"Seagate, based in the Cayman Islands to reduce income taxes, is the world's largest maker of hard disc drives used to store information in computers and electronic devices. The company's superior research and innovation will keep it ahead of competitors.
"After a disastrous 12-month period ending 6/30/09, sales and earnings have begun to explode. Disc drive demand for laptops and mobile computing devices is accelerating and should continue to soar during the next couple of years. Seagate shares sell at just 5.6 times 12-month forward EPS. Buy.
"Silver Wheaton, based in Vancouver, B.C., purchases 15 million ounces of silver annually from mines in Greece, Mexico, Peru and Sweden. The company does not own or operate any silver mines, but operates by purchasing silver produced as a by-product of gold mining.
"Silver Wheaton pays less than $4.00 per ounce for silver from gold miners such as GoldCorp. The company owns purchase agreements on proved and probable silver reserves of about 275 million ounces. Silver Wheaton contracts are immensely proﬁtable and will produce rapid revenue and earnings growth well into the future. Buy.
"Telefonica is the leading provider of telecommunications services in Spain. The company, one of the world's largest and most modern telecoms, provides network services to Spain and Portugal and to Latin American countries including Brazil, Argentina, Peru, Mexico and Puerto Rico.
"Telefonica is creating rapid revenue growth by expanding its coverage area and upgrading its networks. The company has committed to increasing its dividend to $6.00 per share in 2010, which will provide a huge dividend yield of 8.4%.
"The company will increase its dividend in 2011 and 2012, too. Telefonica's shares are undervalued at 7.5 times 12-month forward EPS. Buy."
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