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Inflation is becoming a major concern in our current economic environment. As investors, we have to consider the potential ramifications on our stocks and potentially look at other opportunities.

We've searched through over 5,500 stocks to find undervalued stocks with strong pricing power and have been able to consistently pass on increases in costs of goods sold to consumers.

We define strong pricing power as stocks who have maintained at least a 40% gross margin over the past 10 years. Each of these stocks are undervalued according to a future free cash flow version of discounted cash flow, using a 15% discount rate.

We hope that you'll use this list as a starting point for your analysis:

1. Noble Corporation (NYSE:NE)

From Yahoo Finance:

Noble Corporation provides offshore contract drilling services for the oil and gas industry worldwide. As of December 31, 2009, it operated a fleet of 62 mobile offshore drilling units, including 13 semisubmersibles, 4 dynamically positioned drillships, 43 jackups, and 2 submersibles. The company also offers labor contract drilling services, and engineering and consulting services.

Sector: Basic Materials
Industry: Oil & Gas Drilling & Exploration
Mkt Cap: $11.42B

Vuru Grade: 91.38/100
Growth Price: $76.19
Current Price: $45.29
Margin of Safety: 58.23%

2. Shanda Interactive Entertainment Limited (NASDAQ:SNDA)

From Yahoo Finance:

Shanda Interactive Entertainment Limited, together with its subsidiaries, operates as an entertainment media company in the People's Republic of China. It engages in the development and operation of online games on an integrated platform.

Sector: Technology
Industry: Multimedia & Graphics Software
Mkt Cap: $143.06B

Vuru Grade: 93.72/100
Growth Price: $90.55
Current Price: $44.20
Margin of Safety: 104.87%

3. Novartis Ag (NYSE:NVS)

From Reuters Finance:

Novartis provides healthcare solutions. The Company’s portfolio includes medicines, preventive vaccines and diagnostic tools, generic pharmaceuticals and consumer health products. The Company operates in four divisions: pharmaceuticals, vaccines and diagnostics, sandoz, and consumer health.

Sector: Healthcare
Industry: Drug Manufacturers - Major
Mkt Cap:

Vuru Grade: 91.08/100
Growth Price: $85.48
Current Price: $54.24
Margin of Safety: 57.60%

4. Cal Dive International Inc. (NYSE:DVR)

From Yahoo Finance:

Cal Dive International, Inc., a marine contracting company, provides manned diving, pipelay and pipe burial, platform installation, and platform salvage services to the offshore oil and natural gas industry. It offers marine contracting services in support of the offshore oil and natural gas infrastructure throughout the production lifecycle, including services on production platforms, risers, subsea production systems, and pipelines.

Sector: Basic Materials
Industry: Oil & Gas Drilling & Exploration
Mkt Cap: $662.03M

Vuru Grade: 90.31/100
Growth Price: $24.29
Current Price: $6.94
Margin of Safety: 249.99%

5. Bolt Technologies Corporation (NASDAQ:BOLT)

From Yahoo Finance:

Bolt Technology Corporation engages in the manufacture and sale of marine seismic data acquisition equipment to the oil and gas industry worldwide. It operates in three segments: Seismic Energy Sources, Underwater Cables and Connectors, and Seismic Energy Source Controllers.

Sector: Basic Materials
Industry: Oil & Gas Drilling & Exploration
Mkt Cap: $119.21M

Vuru Grade: 89.84/100
Growth Price: $24.40
Current Price: $13.83
Margin of Safety: 83.63%

6. Amgen Inc. (NASDAQ:AMGN)

From Yahoo Finance:

Amgen Inc., a biotechnology medicines company, discovers, develops, manufactures, and delivers human therapeutics based on advances in cellular and molecular biology primarily in the United States, Europe, and Canada. The company markets primarily recombinant protein therapeutics in supportive cancer care, nephrology, and inflammation.

Sector: Healthcare
Industry: Biotechnology
Mkt Cap: $49.49B

Vuru Grade: 90.17/100
Growth Price: $97.70
Current Price: $53.08
Margin of Safety: 84.06%

Source: 6 Undervalued Stocks With Strong Pricing Power