Eight GPS Stocks to Help Point Your Portfolio in the Right Direction

One of the most popular items on Christmas lists this year were global positioning system [GPS] devices, also known as personal navigation devices [PND]. Many stores sold out of them in early December. What these devices do, in very simple terms, is use satellites to determine your longitude and latitude, to tell you where you are and how to get where you want to go.

Although they are primarily used in boats and aircraft, their fastest growing market is automobiles. Take a look and see if any of these GPS-related stocks can guide your portfolio in the right direction.

Many of the the GPS companies are privately held, such as Magellan Navigation, Inc., one of the largest manufactures, along with a couple of the smaller players, such as DeLorme and Rand McNally & Company.

One big player in this industry is Garmin Ltd. (GRMN) which trades on NASDAQ. According to what the company reported in its latest earnings call it has about 50% of the North American personal GPS market. The stock has a P/E of 31, a PEG of 1.42, and even pays a yield of 0.7%.

The largest GPS manufacturer in Europe is Tomtom (TMOAF.PK). It is a Netherlands-based producer of personal navigation systems which trades on the Pink Sheets in the United States. The stock has a P/E of 22.

NAVTEQ Corp. (NVT) provides digital map information, software and services to GPS systems and Internet mapping systems. The stock has a P/E of 48, and a PEG of 2.1.

Lowrance Electronics is one of the smaller manufacturers of GPS devices that was acquired by Simrad Yachting which is owned by Kongsberg (KGAUF.PK). It occasionally trades in the U.S. on the Pink Sheets.

Trimble Navigation Ltd. (TRMB) makes GPS devices primarily for commercial and government users. The stock has a P/E of 33, and a PEG of 1.69.

SiRF Technology Holdings Inc. (SIRF) makes and sells semiconductor and software products for global positioning system, and other location technologies devices. Although its earnings are currently negative, the stock's PEG is 0.94.

A more remote connection to GPS devices is Sandisk (SNDK) which makes the flash memory used in GPS devices. The stock has a P/E of 105, and a PEG of 0.93.

Tele Atlas NV (TLATF.PK), which provides mapping services for GPS systems, is being taken over by Tomtom.

Disclosure: The author does not own any of the above.

Comments

[Sabre:]

You forgot about Hemisphere GPS (Toronto: HEM) that makes GPS equipment for tractors and farming equipment

2007 Dec 28 12:25 PM

[Daniel W:]

Amazing that HEM wasn't mentioned here. It's currently selling for ~15 times 2008 earnings, in an agriculture industry where there is a lack of stocks to match the lack of inventories and which should do well even if global growth slows somewhat.

MOO is a great index of agriculture names but it has yet to include HEM--and the only reason I can see is that until recently it's market cap was to low. (The requirement is at least 150 million, a mark that HEM passed not to long ago.) Without a doubt, HEM is more of a pure play on the booming ag economy than many others included in that fund.

Many others, from indexes and funds to individuals, don't own this one simply because (I think) they don't know about it. But it is, in my opinion, one of the best deals in the ag sector--an opinion that is backed up by lower forward multiples (despite just as good and probably much better growth potential).

The obvious conclusion is that, when the buying starts in earnest (from the sources mentioned above), HEM shares are going much higher. Although it's selling for 3.60 now, 6 dollars seems a reasonable target for 2008. That would be roughly 25x earnings, and also in-line with recent acquisitions in the space.

--Daniel
danielwahl.blogspot.co.../

2007 Dec 29 09:08 PM