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This past July, Osterweis bought shares of Lab Corp of America (LH) because of its "attractive valuation and unrecognized growth potential." The company, which runs diagnostic and testing labs around the country, recently was trading at 13.5 times its expected 2008 earnings of $4.59 a share and 12.2 times 2009's estimated $5.10. Revenue is growing at 5%-plus annually. "We expect consistent growth even in a weak economy," Osterweis says.

Company

Laboratory Corp (LH) was upgraded to Buy rating from Neutral at UBS. Price target lifts to $80 from $79 and FY 2008 eps estimates upped to $4.71 from $4.63.

Clinical lab services provider Laboratory Corporation of America Holdings said last week that its board of directors approved a $500 million stock buyback program.

The company also said it bought back $131 million worth of stock during the fourth quarter and still has approval to buyback $198.2 million under a previous buyback plan.

LH's target price was reduced at Credit Suisse to $84 from $89 after Q3 results and guidance fell short of estimates. However, believes sell-off is overdone. Maintained Outperform rating.

The stock trades for 9x cash flow.

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