SM: a growth stocks which the market hasn't valued correctly

St. Mary Land & Exploration (NYSE:SM - News) is one stock whose growth Jones says was mispriced. It was 2.15% of the fund as of April 30.

Jones has followed the company since the early 1990s, though it has only been added to the fund in the past year.

Many didn't see the stock's potential, she says. But two years ago she noticed that the company changed direction and focused more on exploration of gas reserves.

At that time natural gas still was relatively cheap. The huge run-up in prices had yet to occur. The result was a company with the potential to increase production when many other wells were running dry.

The company also invested in horizontal drilling technology, further boosting its competitive position.

The stock price, Jones says, was less than the value of their proven reserves assuming a crude oil price at $70 and natural gas at $8.

The stock spent much of 2007 between 30 and 40. It's now trading at 59 in new-high ground.

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