Trimble Navigation (TRMB) was downgraded from Overweight to Neutral at JP Morgan. Stock is up 73% from its January lows, and the risk/reward appears neutral at current levels.

All we seem to be talking about these days is the U.S. economic slowdown. It's a good time, however, to identify companies that will yield positive returns despite a slowdown. Trimble Navigation has announced a buyback, indicating that the company sees value in its shares.

Trimble's board has approved a share-buyback program worth up to $250 million, starting Feb. 1.

The company's revenue climbed 26% to $296 million in the third quarter ended Sept. 29. Operating income rose 21% to $44 million, while operating margins contracted to 14.8% from 15.5% in the third quarter of 2006. GAAP EPS remained flat at 22 cents. CFO Rajat Bahri said that deferred revenue had grown 27% in the three months, taking the deferred revenue figure up 170% year-over-year to $66 million.

Trimble has raised its earnings guidance for the fourth quarter to between 28 and 29 cents a share from its earlier forecast of 24 to 26 cents a share. The revenue projection was also upped to between $311 million and $313 million, from the prior guidance of between $295 million and $300 million. Trimble also confirmed its 2008 revenue growth projection of 14%-17%.

Shares of the company, which provides positioning solutions to corporate and government organizations, have felt the pressure of slowdown-related concerns. They have tumbled since early November, when they were trading above $40. Earlier this month, analysts at Wedbush Morgan slashed the price target for Trimble from $49 to $32, citing concerns over the long-term impact of macro conditions on the Engineering & Construction division. Last week, Wedbush raised the price target up to $36. Wedbush Morgan has a buy rating for Trimble.

Davenport & Company upgraded Trimble earlier last week from neutral to buy on account of the decline in shares. The analysts said in their note to clients that the company could benefit from overseas demand.

Trimble's latest guidance indicates that a soft housing construction market will not have as large an adverse impact on the company as was feared by investors, analyst Yair Reiner of Oppenheimer & Co said. The Associated Press quoted Reiner as having said in a telephone interview, "I think the fact that they're planning to go ahead with this buyback suggests they're not worried about their cash flows next year."

Although Trimble does have exposure to the U.S. slowdown, its international operations account for more than 50% of its revenues. Even though the Engineering & Construction division's growth may decelerate, the performance of the Field Solutions and Mobile Solutions businesses is likely to be strong. While the buyback announcement and raised guidance have given a boost to shares, the earnings release after the close could add some more weight to the shares.

GPS hardware and software applications in commercial fields worldwide

commercial and government GPSs

But neither does he have trouble finding longs. Big positions include Adobe Systems (ADBE) and Nintendo (7974.Japan). His small-cap picks include Ansys (ANSS), which makes engineering-simulation software; Stratasys (SSYS), maker of "3D printers" used for rapid prototyping; and Trimble (TRMB), a maker of high-end GPS devices.

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