Schafer first recommended the stock when it was trading at 12. Now that its near 32, he think's it represents even better value, thanks to improvements in the business. "The board changed after a proxy fight in which 88% of the votes were cast for the new board. The company has an important new partnership with GlaxoSmithKline [GSK]. Flamel has two major platforms for its delivery of drugs. The Micropump is for the oral delivery of small molecules best absorbed in the small intestine. Medusa is for delivery by injection of therapeutic proteins and peptides. The two technologies affect the release of drugs, making them safer, longer-acting and in some cases better targeted to the diseases the drugs are intended to treat."

"Shire is a specialty pharmaceutical company focused on CNS [central nervous system], primarily its Adderall XR and Daytrana franchise for ADHD [attention deficit hyperactivity disorder]; gastrointestinal and renal, and human genetic therapies including Elaprase for Hunter syndrome. The company focuses on products that sell in special niches, with high sales-force knowledge of the specialties. Given Shire's leading position in ADHD, there was significant concern about the sustainability of the franchise when Adderall XR's patent exclusivity expires in April 2009."

Schafer is a fan of spinoffs. Of the three companies that Cendant split into last year, he prefers Avis Budget. He believes that last year the company was hit with a perfect storm of problems, but that it will bounce back. "Together these factors led to pretax margins of 2.9%. Management has laid out a plan to return to 8% margins before taxes. With most competing companies like Hertz [HTZ] now public, pricing discipline will be more important. There are signs of better pricing in the commercial markets, and the company's off-airport business will continue to grow by 20%. With normalized operating margins, achievable this year, Avis Budget could generate free cash flow in excess of $3.50 a share. It could be an attractive acquisition candidate, though as long-term holders we would prefer the fundamentals to play out and get the stock into the 30s before a private-equity buyer pounces. It is now 22.25."

"Ebitda [earnings before interest, taxes, depreciation and amortization] margins are in the range of 11% to 12%, and growing. Prior to the spinoff, the private-equity firm of Clayton Dubilier & Rice bought around 48% of Sally Beauty Holdings for about $6.75 a share. The opportunity to invest at close to CD&R's price is attractive, especially when we know that private-equity firms look to make two to three times their money in three to four years. The stock is now around 7.50." He goes on to say that he likes the CEOs ambitious internatinal expansion plans.

"It owns the largest conventional oil pool discovered in Alberta in the past 25 years, with 205 million barrels of oil in place. About 7.5% is proven and probable reserves. Up to 20%-30% of the original oil probably could be unlocked through a water-flood program. A successful water-flood program should be able to increase recoverable reserves to 42 million-52 million barrels of oil."

"The growth of casing drilling is constrained only by people and materials. Tesco will invest a lot in this business in 2007 to drive revenue higher. Therefore, it could cost the company 20-to-30 cents a share this year,. Tesco will earn about $1.20 to $1.30 a share. Base earnings could grow at a mid-teens rate in the next few years. Casing drilling is poised to contribute several dollars per share in earnings two to three years from now. The stock could rise to 28-30 a share by the end of this year, versus 17 now."