Personal navigation devices maker Garmin ( GRMN) apparently has caught a cold.

Despite indications of a blockbuster holiday season, the company's stock is down nearly 20% since Dec. 10 as investors remained anxious that discounts designed to lure customers could eat into the company's margins and bring down the average selling price (ASP) for its products. Slowing sales in Europe could also drag down revenue growth this year, some analysts say.

Though Garmin is battling increased competition from rival TomTom and smaller GPS makers, fears around the company's growth may be overblown. The company is expected to beat analysts' estimates for the fourth quarter as demand for GPS products in the U.S. shows no signs of slowing down.

"Garmin ranks high in terms of both of our quantitative and fundamental analysis," says Shawn Price, senior portfolio manager at Navallier, which has Garmin as one of the top 10 holdings in its Touchstone Large Cap Growth Fund ( TEQAX).

"Quantitatively it is in the top 20% of our system on both 52-week and 30-day levels, while its fundamentals still are extraordinarily strong," he says.

Price points out that Garmin's revenue in the third quarter grew 79% from a year ago while earnings were up 57%. The company generated $117 million of free cash flow in the quarter and has a price-to-earnings ratio of 27.11 and a forward P/E of 20.45. The industry average trailing P/E is estimated at 26.30.

"With this kind of P/E numbers we feel that the stock hasn't gotten ahead of us," says Price.

That's why at its current price levels Garmin could offer investors a good buying opportunity. Shares of Garmin were off $2.43, or 2.6%, to $89.65 in recent trading on Wednesday. The stock is now down nearly 30% from its 52-week high of $125.68.

"There's more upside to the stock than downside right now," agrees Joe Biondo Jr., chief investment officer for Biondo Investment Advisors, which holds Garmin in its portfolio. "If I didn't own the stock, then between $85 and $90 is a decent price to be entering it."

The stock has five recommendations for a strong buy, four for a buy, 11 for hold and two recommendations for underperform currently.

Garmin's fourth-quarter earnings, based on the holiday sales season, are expected to be strong. GPS systems were one of the hottest consumer products this year and Garmin's device ranked among the top sellers in the consumer electronics segment on Amazon.com ( AMZN).

"Garmin executed exceptionally well," says Yair Reiner, an analyst with CIBC World Markets, which makes a market in Garmin shares. The company kept up with demand when it doubled its manufacturing capacity heading into the fourth quarter.

"Some of its competitors such as TomTom had trouble keeping up and simply didn't have enough devices in the market, but Garmin did a very good job of anticipating what would be a break-out quarter for the segment," says Reiner who has a sector perform rating on the stock and a 12- to 18-month price target of $99.17.

While Garmin is likely to exceed analysts' expectations for the fourth quarter, investors and analysts are concerned about possible margin declines. The average selling price of Garmin's devices declined at least 18% during the fourth quarter, estimates Reiner. The company had guided a fall of 15%.

"This means 2008 will begin with ASPs down approximately 34% from the start of 2007," says Reiner.

Growth in the total number of devices sold could offset some of the decline, but increased competition could eat into Garmin's margins.

"The question for investors is what kind of discounting did Garmin do during the holiday season and how much of it was there?" says Biondo.

Despite these fears, Garmin's stock may have been beaten down more than it deserves.

"At approximately $100, Garmin seems priced right," says Reiner. The mean price target for the stock is $113.14, according to Thomson Financial.