Investors may not be familiar with the name Aber Diamond. But, notes Tony Sagami, many are familiar with Harry Winston, the "Jeweler to the Stars." In his Asia Stock Alert, the advisor notes, "In June, the company changed its name from Aber to Harry Winston Diamond Corp. (NASDAQ: ABER), taking advantage of this famous name."

The advisor explains, "Harry Winston Diamond Corp. is one of the largest diamond companies in the world. It owns a 40% stake in the Diavik Diamond Mine, located 150 miles south of the North Pole and is one of the world's richest diamond-bearing deposits."

More importantly, he adds, the diamonds that come from this mine are some of the highest quality diamonds in the world, which he explains is why management acquired the Harry Winston retail chain last year.

Says Sagami, "That gave the company complete vertical integration and control of the entire process -- from digging in the dirt to slipping the finished ring on its customers' fingers."

"It's a great Asia play," the advisor contends. He notes that sales for 2006 jumped to $191 million, a 49% increase from fiscal 2004. Most of that demand, he points out, is coming from new millionaires in Asia, a trend he expects to continue. This, he says, is the reason why retail stores are scheduled to open in Beijing, Shanghai, and Hong Kong.

Says Sagami, "I expect these new stores to be huge hits from the day they open and immediately contribute to Aber's bottom line."

Meanwhile, he adds, diamonds, like gold, are a great hedge against the falling dollar and inflation. And, he notes, "The stock pays a $0.25 per share quarterly dividend. This gives us a 2 1/2% yield at current prices while we wait for its share price to appreciate."

"It also has great fundamentals. Annual sales have jumped from $96 million in 2004 to $505 million last year, while earnings per share have jumped from $0.49 to $1.39 during the same time.

"On top of that, Wall Street is grossly underestimating its value. At 20 times earnings, Harry Winston sounds expensive, but once you back out the depletion write-offs, you'll find that ABER sells for 12 times cash flow, the most accurate way to measure a natural resource company.

"At that price, ABER is cheap, cheap, and cheap. Diamonds may be a girl's best friend, but I expect them to treat us pretty well too. This company is selling for less than it is really worth. My target is at least $60 and maybe even more if inflation becomes more of a problem."

Each day, Steven Halpern's TheStockAdvisors.com features the latest investment ideas and market commentary from the financial newsletter community.