Within an hour's drive from our house you can visit any number of old mining camps where fortunes in gold were won. What they don't tell you in these places is how many miners dug up nothing more than iron pyrite -- or, as it is more commonly known, fool's gold. Pyrite duped miners with its gold color. So they'd keep digging for it, unaware that all they were doing was making bigger holes. But then one day they'd bring their haul in to be weighed and the nasty truth would be revealed.

The quest for profits in companies forging turnarounds can be more than a little like the search for gold. Occasionally you'll strike a very rich vein. More often, you'll accumulate big chunks of pyrite. But pyrite stocks usually don't reveal themselves quickly. That's why I find myself treading more than a little carefully around Nokia's (NYSE:NOK) first-quarter earnings report.

At first blush, the results look all shiny and sparkly. Net sales grew by 17% year over year. Net income grew by 19% over the same period. Moreover, the 19 euro cents ($0.25) Nokia earned per share were well above the Street's estimates. The upside, according to comments made in a statement by Nokia CEO Jorma Ollila, was due to the market growing far faster than anticipated. And the company expects the trend to continue, revising 2005 estimates for handset volume by 100 million to 740 million.

Yesterday, investors treated the news as if it were another gold strike, sending the shares higher by more than 6%. But is it? Yeah, maybe. Nokia sports more than $16.4 billion in cash and investments, or $3.44 per share. That means ongoing operations are selling for $12.98 per share as of this writing. Street estimates called for $1.05 in 2005 per-stub earnings before seeing this quarter's upside. That means Nokia could be trading for no more than 12.4 times estimated income.

Think about that for a minute. Nokia could grow at close to 20%, but the stock is selling for nearly half that. Sure, declining market share and weak sales in North America may indicate that Nokia is nothing more than a chunk of useless pyrite. But it seems much more likely that it's a golden nugget just waiting to be mined, polished, and, ultimately, cashed in.

For related Foolishness:

  • How is it that Microsoft (NASDAQ:MSFT) deals, but Nokia wins?
  • Nokia's cash cushion has been propping up its share price.
  • Here's how Nokia got into trouble in the first place.

The best part about Nokia is you get paid to wait for the upside with a 2.7% dividend yield. Yummy. Want to learn more about dividend growth investing? Give Motley Fool Income Investor a try risk-free for 30 days.

Fool contributor Tim Beyers thinks Nokia's hometown of Espoo sounds like a planet in the Star Wars universe. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Fool profile, which is here. The Motley Fool has a disclosure policy.