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Not since Samuel L. Jackson graced the screen as Danny Roman in the Negotiator have I seen such incredible negotiating skills. In the last month Garmin (GMRN) has managed to turn a very sticky situation into a very big win. Perhaps there was some luck involved, but at this point, I think we can give them the benefit of the doubt. The company's future ability to access the mapping technology their products rely on (at reasonable prices) had been in limbo ever since Nokia (NYSE:NOK) announced its acquisition of Navteq (NVT) and then TomTom made a bid for the only other major map-maker Tele Nav.

Fast forward a few months, and Garmin has managed to seal a deal with Navteq for rights to their maps through 2015, with an option to extend until 2019. Simultaneously, they have forced TomTom to pay ~45% more for Tele Nav, at an astounding acquisition price of $4.2 billion. This acquisition would have forced debt-free Garmin to take on a major liability and, in my opinion, would have taken focus away from their core business…selling their GPS and personal navigation devices. Let someone else make the maps.

Couple this news with a clever holiday marketing campaign (have you seen their commercials…they worked last year), a non-scary P/E multiple for their astounding historical and predicted growth rates (important considering current market sentiment), and lots of cash laying around that could be used for buybacks or increased dividends…how could growth managers avoid buying this best-of-breed stock now that a lot of uncertainty and risk has been eliminated? It doesn't hurt that they happen to be in a very hot industry and in one of the top 3 sectors. The broader market alone might be able to propel them higher.

The stock pulled back significantly when they came out that had out-bid TomTom for Tele Nav. While it did jump 16% Friday with the news they withdrew their bid, the stock is still off nearly 23% from it's 52 week high. Estimated earnings for next year are projected at $4.34/share, a figure I calculate to be very conservative at only 20X growth, especially when their 5 yr historical growth has been 35X. Their 5-yr projected growth rate is 20X with a standard deviation of 8, as calculated by 13 analyst estimates. If you bias growth to the high side for next year, and assume strong holiday sales and continuing industry trends, you could easily make a case for 2008 earnings of $4.45/share. At its current multiple of ~30, that would yield a target price of $133.50 --- 37% upside from current levels. As far as downside risk, consider a 25X multiple with just this years earnings of $3.55 (3 quarters of which are in the books and includes a rather conservative 4th quarter estimate in my opinion), you get a price of $88.75, (-9%) from current levels. Needless to say, I like stock. My price target is $130, and I will be adding to my existing long position next week on any dips.

Disclosure: Author has a long position in GRMN

Source: Garmin: The Master Negotiator