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U.S. investors looking to cash in on Israel's

peace dividend needn't look beyond the

Nasdaq

and the

NYSE

.

Peace talks between Israel and the Palestinians have spurred a rally on the Tel Aviv 100 index, bolstering interest in Israeli stocks worldwide. For now, people stateside have limited options for tracking the broad Israeli market: There's the tiny

( BWFAX)Blue & White fund, the

(AMDEX) - Get Free Report

Amdex35 Israel fund and the closed-end

First Israel

(ISL)

fund.

But there is no shortage of Israeli companies trading shares in the U.S., led by drugmakers

Teva

(TEVA) - Get Free Report

and

Taro

(TARO) - Get Free Report

, and technology companies

Amdocs

(DOX) - Get Free Report

,

M-Systems Flash Disk

( FLSH),

Marvell Technologies

(MRVL) - Get Free Report

,

Nice Systems

(NICE) - Get Free Report

and

Given Imaging

(GIVN)

.

Though these companies share most obviously a link to Israel, fans say investors should look at them because of their strong growth prospects and solid management. Those factors can outweigh the risks that many investors associate with sinking money into Israel, with its contentious political and security situation.

"Judging by the increase in the volume of Israeli shares traded in the U.S., I believe there is optimism wirth respect to Israel," says Robert Goldman, chief investment officer of the Blue & White fund.

Indeed, Richard Watson, an analyst at William Blair & Co. who tracks the generic drugmakers, says investors looking two or three years out should take the time to check out Taro's books. To be sure, the company has suffered some recent setbacks, namely a July 2004 earnings shortfall that knocked the stuffing out of the stock. Taro lost two-thirds of its value at one point in 2004 before staging a late-year rebound, but now Watson says it has taken steps to get back on the right track. "They are doing a lot of things that are painful now but will be useful in the long run," he says.

Also on the radar is Taro's much larger peer Teva, which has been on a winning streak in recent months and enjoyed a jump last week on the Tysabri recall that riddled rivals

Biogen Idec

(BIIB) - Get Free Report

and

Elan

(ELN)

. Watson has an outperform rating on Taro and Teva, and his company has had no investment banking business with either company.

Other opportunities exist in technology and medical-related fields, analysts say.

"In the medical devices space, Given Imaging is one of the fastest-growing companies," says Amit Hazan, an analyst at SunTrust Robinson Humphrey who rates the stock buy and whose firm hasn't done investment banking with Given. The company makes wireless imaging systems for a visual examination of the gastrointestinal tract. Hazan warns that investing in the company "carries its own risk because of its high valuation." The stock trades at 36 times next year's earnings estimates, which is almost double the

S&P 500

multiple.

Meanwhile, billing software outfit Amdocs is up 34% since last October, riding a string of strong earnings reports. Peter Jacobson of Kaufman Brothers says the company is benefiting from the consolidation of the telecom industry. Amdocs handles billing for the combined Cingular and AT&T Wireless, and is expected to have a good share of the

Sprint

( FON)-

Nextel

( NXTL) deal as well.

"These consolidations play to Amdocs' strengths and its ability to handle complex environments," says Jacobson, who has a buy rating and whose firm has no investment banking relationship with Amdocs.

Similarly, RBC Capital Markets analyst Satya Chillara likes M-Systems Flash Disk in spite of a 40% run-up that has pushed the stock up to a recent $23.80. The company makes thumb-sized storage drives for the consumer electronics market.

"I'm comfortable to say the company can grow," says Chillara, who rates the stock sector perform and whose firm hasn't done investment banking with M-Systems. "It has a decent technology and will benefit from the trends of people converting to their flash disks."

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