Navteq has been a favorite of mine (NVT - $44.37)

This stock has been a favorite of mine since last summer and not because it has had incredible movement on its share price. It has actually traded in a bounded range of $40-$55. I think it will bust through the $55 sometime this year and never look back.

I first learned about this stock after I bought my car in July '05. It came with a navigation system, the map in this system is created by Navteq. These navigation systems are no longer tied exclusively to the luxury cars (mine is a Honda Accord). Almost all luxury cars come equiped with their maps so obviously there is no more growth available in that segment. As the hardware components for these systems become cheaper more will be utilized in cheaper cars. Thus fueling more growth for Navteq.

That is nowwhere near the whole story with this guy though. Perhaps you have been to Yahoo! or Google's maps page to get directions. Yes, that would also be a map from Navteq. These types of online maps are growing in popularity and frequency on the web and they all have to pay regular fees to Navteq to get updates and continously use their maps.

This is still not their whole story. The largest growth segment of their business is in the handheld GPS devices, such as the ones that Garmin produces (check out how their stock has been doing). This is a relatively new area for Navteq and its future growth as admitted by them in their most recent conference call, is completley unkown by them right now. These type of devices are becoming more affordable and wildly popular which is huge for this stock.

Lastly digital maps are just starting to be introduced into cell phones. This is just at the ground floor but this is potentially their largest market. They are expecting very big things from cell phone deals in the future and are in current talks with the cell phone companies. As more news about these deals come out in the future, expect the stock to react very well.

The stock is currently at $44 almost $10 less then it was a week ago. This is because they reported earnings last week that missed analyst's estimates by 1 cent. Revenue for this past quarter was up 17% from the same quarter a year ago but net income was about the same. After listening to their conference call they explained that more of the expenses associated with updating their mapping software fell in the first quarter this year then last year. I think this is good news and presents a great buying opportunity because those expenses should not be as great in this upcoming quarter and the company's earnings should reflect that. WIth a P/E of 25 the stock is undervalued considering it is expected to grow earnings at close to 30% a year in the future. Which I believe to be very conservative esitmates.

I am expecting a lot of positive news in the future as there are just too many applications for their digital maps. The lowest this stock should ever get again is $40 while it should be heading back to the $55 level and beyond if things move right. This is another stock with great long term growth potential and a good looking near term risk/reward ratio. Sign me up!