Investors were understandably reticent about diving into the IPO in light of lousy stock- market conditions in April and the near-moribund new-issues market. RWE originally hoped to raise $1.8 billion but had to cut the size of the deal by 25% to get it sold. Now, however, the shares trade at 16 times forward earnings, a discount to the industry average of around 22. What's more, American Water sports a 4% dividend yield, so investors are getting a decent payout while waiting for RWE's remaining issues to be worked through. Ryan M. Connors, an analyst at Boenning & Scattergood, one of the underwriters of the IPO, has a Buy recommendation on the stock and a price target of $26, about 30% above recent levels. Other analysts put the projected 12-month price closer to 24.

COUNTING THE POTENTIAL for both Testim and Xiaflex, Lee and PAI partner Joon Yun see Auxilium shares reaching 100 over three years, up from about 37 recently. So far this year, the shares are up about 21%. Auxilium, founded in 1999, has yet to turn a profit. It lost more than $40 million in each of the past two years. But that could soon change. Lee values the Testim business at $1 billion. That assumes the business is worth about five times its expected sales three years from now -- a conservative valuation for a biotech concern. The Xiaflex business, he suggests, is worth about $3 billion. He figures the business can capture 20% of patients with the hand disorder by 2011, winning $300 million in sales. To that sum he applies a multiple of 10, which is not unusual for super-high-growth biotech businesses.

The shares, near 96, also trade at 17 times 2008 profits -- by no means cheap but still reasonable, compared with the average 29 times for other Internet retailers. Even Stamps.com (STMP) sports a 22 multiple. Goldman Sachs analyst Jennifer Watson isn't rattled by Priceline's 52% pace in international growth, since she has factored in slower growth rates of 33% for 2009 and 22% in 2010, and Priceline's recent margin improvement also could spell more upside to future estimates. Banc of America Securities analyst Brian Fitzgerald called the midweek selloff "an overreaction" to light European bookings and reiterates his $155 price target.

While Timberland had a $19 million second-quarter loss, it maintained its margin outlook for the year, and it's tempting to hope the company is near the end of its serial turnaround. But notwithstanding its familiar brand and debt-free books, Timberland could still be thwarted by the deepening consumer slump. Rising costs for raw materials and Chinese labor cannot be dismissed. U.S. points of sales have been declining for two years, and given retailers' tighter focus on winning brands in a recession, "we think Timberland is at risk of losing more floor space at retail, which could weigh on top-line growth and margins if the company needs to move more inventories than anticipated into off-price channels," says Citigroup analyst Kate McShane. The shares may not be as exorbitant as before, but at about 16.50, they still trade at more than 19 times 2008 earnings, versus 17 times for global powerhouse Nike (NKE) and 16.7 times for footwear stocks.