Barron's Summary

Barron's discusses Cleveland-Cliffs (CLF), saying that thanks to shrewd, low-cost acquisitions during the steel industry's downturn earlier in this decade, the co emerged as the top N-American producer of iron ore, just in time to benefit from the surge in steel and iron-ore prices in the past 2 years. At 36 a share, the co fetches 4x estd '06 pretax cash flow, but analysts value the co around 50. The big risk: a plunge in commodities prices.

According to the Barron's, a bullish investor, Paul Able of Kinetic's Mutual Funds, sees about 25% upside in Invitrogen (IVGN) shares b/c it should prosper along with the biotech business, and has begun to work out its most pressing recent problems. "We've guided that we will do earnings of between $3.60-3.90 this year and obviously we will do somewhere in the $4-plus range next year [Bullish analysts look for $4.35-plus.], says CEO Greg Lucier. Since the life-sciences industry trades on a multiple of, call it 20-22, our stock should be worth somewhere around 90 a share."

"The Trader" section highlights Interface (IFSIA), which makes modular carpeting. It's a smallish co, around $700m in mkt value with another $430m of debt. The stock is off its highs above 15 early in the year but has more than doubled from its Apr'05 low. In the 2Q Interface had 12% top-line growth, orders rose 13% and the backlog was 20% higher than a year earlier. The Street expects the co to earn 61c a share this year and 86c in '07. But Charles Kantor, a portfolio manager at Neuberger Berman, thinks next year's results will more likely be between 90c and $1 a share. Interface is paying down debt with free cash flow and recently sold a European fabrics unit. The pullback in oil prices is a positive, as the co is exposed to costs of petroleum-based materials. As a possible growth kicker, Interface struck a deal to develop Martha Stewart-branded carpet tiles for homes. The stock has typically enjoyed a P/E multiple over the past 10 years above 16, so applying such a multiple to potential '07 earnings near $1 a share implies possible upside above 20% in a year.

"Technology Trader" discusses OmniVision (OVTI), whose stock, at $15, looks absurdly cheap. There's plenty of demand for the image-sensor chips. The co has $7 a share in cash, and the typical Wall St. analyst expects it to earn at least $1.35 a share in the F'07. The co has enjoyed gross margins as high as 40% in some periods. But high margins in a growing semiconductor mkt are the sort of honey that brings competitors buzzing. "Micron (MU) came from nowhere to become the No. 1 CMOS image sensor supplier in the mobile phone mkt," says Tristan Gerra, of RW Baird who has followed OmniVision since it came public. Micron's chip factories gave it a cost advantage, whereas OmniVision had to allow some profit margin for its manufacturing partner Taiwan Semiconductor (TSM). Therefore the article concludes that no one on Wall St. really believes the earnings forecasts for OmniVision.

Fund top holdings include: WTNY, SPN, TTI, GEO, PLCE, CXW, WEBX, ITG, BID and LDG.