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Palm (PALM) is looking like a GARP bargain, with a nice cash hoard.

The company was a high-flier after being spun-off from 3COM. On the day of the IPO on March 2, 2000, the stock soared to $165 before settling at $95. Back then, the company was dominant in making handheld computers. Two and a half years later, Smartphones started hitting the handheld computer market and the stock was selling for less than $1.

The company did a big reverse split in 2002, bought Handspring a couple years ago and now has a strong position within the Smartphone market with their Treo products. Free cash flow is about a buck a share.

The company has $5/share in cash and significant tax assets. Essentially the company won't be paying taxes on their next $1 billion in operating income. Acknowledging their low share price, the company recently announced a $250 million stock buyback program... at today's price, this represents over 15% of outstanding shares.

The share price has been weak as top line growth has been slower lately. But product cycle is key in this industry, and PALM has new products coming out and is making an international push.

I think PALM is worth about $25.

Disclosure: I presently own shares of PALM

PALM 1-yr chart:

palm

Source: Palm's Cash Hoard Adds To Its Appeal