Data storage giant EMC (NYSE: EMC) announced blowout earnings last week, and even more important, it announced a doubling in its share buyback. It's always a good sign when management not only speaks about having faith in its company but actually takes an action to show that faith, then you can assume things are good. It's clear to management and savvy investors that EMC stock is ridiculously cheap.

EMC's market cap is $52 billion. It owns 86% of the wildly successful VMware (NYSE: VMW). Its stake in VMware alone is worth over $40 billion. This means that the market is currently valuing EMC's core business at just $12 billion. Even the more conservative analysts on Wall Street have the core business valued at at least $25 billion. That comes out to about $6.50 a share more than where EMC stock is trading.

Now I know that there is usually some kind of discount in a case like this, but 25% seems a bit much. Go long EMC.

Disclosure: Writer holds stock in EMC. He has no position in any other stock mentioned as of 11/2/07.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com.