At its current price, BOI is trading at 3.4X the 2009 estimate and 3.5X the 2010 estimate, based upon consensus estimates for 2009 and 2010, respectively. These are well below the median P/E ratios for the industry, also based on consensus estimates. BOI's growth prospects and its dividend yield are significantly higher than those for the industry. Our target price of $32 represents about a 3 ½X P/E based on our 2009 estimate of $9.35 per share.

Cautious on High-Growth MSCC

Microsemi Corporation (MSCC) is an OEM of semiconductor analog and mixed signal ICs, with substantial presence in the high reliability space. The company is strongly positioned in high-growth markets such as commercial aerospace, implantable medical devices (expected to grow 15-20% annually over the next four years) and LCD TVs.

March quarter results were inline with consensus estimates, both on the top and bottom lines. Bookings outpaced revenue for the twenty-second consecutive quarter. With strength in its served end markets and restructuring benefits kicking in, we expect both revenue and margins to improve in 2008.

As expected, the company saw reduced profitability in 2007. The company acquired some low-margin business, which is a constraint to margin expansion. Ongoing R&D investments are also likely to raise operating expenses. Moreover, the revenue declines are driven by continued weakness in the semiconductor capital equipment market, and the recessionary trend in the U.S. market could make matters worse.

MSCC shares are currently trading at a 17.5x multiple of our 2008 EPS estimate (P/E). The company operates in attractive markets that are expected to grow strongly in 2008. Although we feel very positive about the stock, we are taking a cautious approach. Consequently, we are reiterating our Hold rating and target price of $27.50 (21.0x P/E).

Slow Market Impacting Valspar

Improved pricing and product mix, along with the positive benefits of the restructuring activity, are helping paint and coatings manufacturer Valspar Corp. (VAL) to realize sales gains. Presently, the company's fastest growing markets are China, Latin America and Eastern Europe.

Management is currently using Lean Six Sigma to drive productivity in the corporation. However, a slumping housing market slowed demand for architectural and wood coating products. Moreover, higher raw material costs are eroding margins for the company.

We expect margins to remain under pressure due to lower volumes in major product segments and higher raw material costs.