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N (Inco Ltd): The troubled Voisey's Bay project continues to plague results at Canadian nickel producing giant Inco. Uncertainties surrounding the project have put in doubt the planned opening of the mine in 2000. Disputes over aboriginal land claims, mining taxes, power costs, and royalties to the Newfoundland government continue to be stumbling blocks to a timely opening. Inco and the Prime Minister of Newfoundland have recently become embroiled in a bitter dispute over the royalty rate to be paid to Canada's poorest province, with neither side willing to budge. The feisty P.M. has threatened to scuttle the whole project and deny Inco permits if his demands are not met. We believe that fears of a deal not being reached are unfounded.  Neither debt heavy Inco nor   unemployment ridden Newfoundland can afford not to strike a deal. We expect the signing of a deal to provide a boost to beleaguered Inco stock, which has fallen 65% since May of 1997. We believe that the stock will receive a further boost from rising nickel and copper prices later this year. The Asian crisis has driven the prices of both nickel and copper to multi year lows. We believe that a bottom is now in place in both metals. A gradual recovery in Asian markets in late 1998 and 1999 will lead to rising prices for these metals later this year. We expect Inco to return to profit in 1999 as the Asian markets emerge from recession. Trading at less than half of book value, these shares are a compelling value play at these levels. We look for Inco shares to move back towards their 200 day moving average of 18 by year end.  We see the stock hitting the 25 to 30 range within 18 months as uncertainties over Voisey's Bay are resolved and metal prices begin to recover. The  current levels of extreme pessimism surrounding these shares provide value hunters a perfect buying opportunity.

PHYC (PHYCOR): Shares of PHYC have fallen 75% over the past year as troubles at several health care provider companies have led to a complete loss of confidence in the industry by investors. Phycor acquires and operates medical clinics, and develops physician   operated independent practice associations (IPA's). The company currently owns 24 clinics and manages IPA's with 3,000 doctors who serve 133,000 patients. The shares of IPA companies have been decimated as troubles at aggressively managed companies like Med Partners and the recently bankrupt FPA Medical Management have dragged the entire industry down. Overly aggressive expansion, inability to meet the terms of HMO contracts, and sour relationships between physicians and corporate boards have plagued several companies in the industry. Growth in the industry has  slowed amid the confusion surrounding the future of several IPA companies. The conservatively managed Phycor has managed to avoid many of the problems of its competitors, but has been unable to escape the negative sentiment surrounding healthcare providers. The shares of PHYC fell 40% after it missed estimates by 2 cents a share and announced that growth in the second half would fall 10% short of estimates. We believe this fall was unwarranted based on the companies fundamentals. Although the company missed estimates, earnings still rose by 10% and revenues shot up 41%. Operating cash flow continues to grow at strong levels. We expect growth to resume in the 20-25% a year range next year as the current industry turmoil subsides. Based on its fundamental outlook, Phycor is currently extremely undervalued. The company is trading at just 0.8X book, 0.47X sales, and at a prospective 1999 PE ratio of 9. The current share price is based on the extreme negative investor sentiment towards the healthcare industry, rather than on the fundamental picture of Phycor itself. We expect the shares to stabilize at the current level, and to rise sharply as the healthcare industry begins to restore its credibility with investors.  Technically, the stock held an important 4 year support level at 7 1/2 during its recent fall. We expect this support level to hold, and the shares to recover to the 15-20 level within the next 6-9 months as investors begin to once again judge Phycor on its strong growth prospects.

We believe that investors who buy Venezuelan stocks in the coming months will be richly rewarded over the coming 2 to 3 years. The market is extremely undervalued. Stocks are trading at record low ratios of price to sales and price to book. Corporate balance sheets are at their strongest in years, and yet stocks are trading at record low P.E. ratios. We expect an upward tick in oil prices and an easing of the Asian crisis to give Venezuelan shares a strong boost over the next few months. The market will receive a further boost after December elections. We expect the Venezuelan stock market to appreciate 50% from its current depressed levels over the coming year. The time to buy emerging markets is when the blood's in the streets, which it clearly is in the Venezuelan market. Our favored stocks to play a recovery in Venezuela are CANTV, Mavesa, and Corimon.  

VNT (CANTV): CANTV is Venezuela's national telecom provider. The stock has tumbled from 41 in mid April as the Venezuelan economy fell further into recession and Asia related worries caused investors to exit emerging markets stocks en masse. Venezuela's economic woes have caused the company's 1998 earnings estimates to be lowered 20%.We look for earnings to stage a strong comeback as Venezuela digs itself out of recession later this year. VNT is currently the cheapest Latin American telecom play. The company is valued at just $1,000 a line, less than half the average valuation of other Latin American telcos. The shares are trading for less than their $21.57 book value. Trading at just 6.5 times this year's estimates, and 5.9 times 1999 estimates, CANTV is deeply undervalued. The technical outlook for the shares is showing encouraging signs of strength. We believe a bottom is in place. The stock held an important Gann support line at 18 1/2 during its recent lows.  Accumulation has been taking place in the shares since July, a period during which the stock fell 30%. We look for these shares to receive boosts from an oil fueled economic recovery and a more favorable investor outlook towards emerging markets later this year. Our first upside target is the support zone around the 25% retracement level at 24-25. We expect the strong resistance level at 29-30 to hold the shares until after the Venezuelan elections in December, when we expect a post election relief rally. Our 12 month target for CANTV is 35 to 40 a share. 

MAV (Mavesa SA): Mavesa is Venezuela's leading manufacturer of consumer cleaning products and processed foods. The company's brands are market share leaders in the Venezuelan market (including an 81% share of the margarine marketplace). Second quarter unit volumes rose 22.2% and net sales rose 17%, but gross margins fell as the cost of raw materials rose 17.4%. First half profits fell 24%. Management has announced that the company will post lower profits this year due to the recession ridden Venezuelan economy. We expect the Venezuelan economy to begin to recover later this year as oil prices begin to rise. We expect MAV's profits to recover as consumer demand picks up. The stock, down 67% from its September 1997 level of 9, is currently trading at just 8.9 times 1999 earnings estimates. The PEG is 0.43. Compare these valuation levels to the 30X earnings that slower growing US consumer products companies currently fetch. Technically, the stock is showing signs of breaking out of its slump. Money Flow turned upward in mid July, and has continued upward during the stock's recent slide. Weekly MACD and Stochastics registered strong divergences during the latest slide. Weekly ADX has turned down from a deeply oversold 51. We look for these deeply undervalued shares to find their first upside resistance at 5 3/4. Our upside target for Mavesa is 7 1/2. 

CRM (Corimon): Paint manufacturer and distributor CRM successfully emerged from bankruptcy in late 1996. The company's stock has fallen over 80% from its November 1997 level as a sharp downturn in consumer demand and rising interest rates have bit into profits. First quarter profits slid almost 90%. The company recently delayed plans to sell its ailing packaging unit, which has been severely affected by the downturn in the Venezuelan economy. Despite this delay, we still expect the division to be sold when the economy turns up. The company's core paints business has remained solidly profitable throughout the downturn. The stock is extremely undervalued at current levels, trading at just 0.2 times book value. We view this stock as a good way to play an upturn in domestic demand in Venezuela, but we would caution that it is an extremely risky investment suitable for speculation only. 

Air Canada is currently undervalued relative to both its historical norms and its industry.  ACNAF is trading at 1.4 times cash flow, versus 2.3 times for the airline industry.  Other valuation measures are equally undervalued: ACNAF trades at a trailing P/E of 4.3, versus an industry average of 9.5; ACNAF has a Price/Book ratio of 0.58, versus 1.01 for its industry.  We expect Air Canada's depressed valuation levels to return to near the industry norm as investors begin to put September's strike behind them and start to focus on the company's future prospects.  An expansion of the P/E ratio to the industry average implies a price of $5 1/2 to $7 over the coming year.