Dr. Pepper, 7-up, Mott’s Apple Juice, A&W Root Beer, etc. The stock was spun out as a dividend to shareholders from Cadbury-Schweppes. It was sput out at $27.50. When a stock is spun out like that as a dividend then its classic what happens next. The large funds that liked Cadbury but didn’t feel like owning another stock in the food/drinks/snacks space will sell their shares, regardless of price or value. Combine that with the general market selloff and I think DPS is probably the safest play out there at the moment, trading where it is in the $20s. It has a P/E ratio of 10, versus 18-19 for KO (Coke) and PEP (Pepsi) even though it’s the third largest soft drink producer in the world. That’s a stretch. You can buy it here and easily ride it to $25, where its still cheap (I think it goes to $30) but might as well take profits there at this point.

Nine out of ten drivers think they are above average drivers. Combine this with the rural-to-urban trend in developing countries: more people commuting to urban areas equals more people driving equals more accidents. Consequently developing countries are beginning to mandate airbags and seatbelts in every car. Who is the leader? ALV, the Swedish holder of most of the patents on airbags and seatbelts. They have 30% market share, sell to every auto maker in 30 countries. They have a 3.5% dividend and have raised their dividend in every year of the past six and they’ve used excess cash to buy back 25% of their stock in the past few years. They trade at a forward P/E of just 8 because everyone is worried lagging auto sales in the US will effect them. It will effect them but a P/E of 8 when they should be trading at a P/E of 20 is enough of a cushion to make this dirt cheap. Buy at $47 or below and hold it until $60 within the next year (and get that 3.5% dividend).

AW and RSG just merged, consolidating further the global waste industry. A global economy means more garbage than ever. But margins are tiny in the residential and commercial waste space. The next guys to get consolidated are what I call the “garbage 2.0” stocks, the niche players with high barriers to entry and larger margins. ECOL in radioactive waste space has been around since 1952 and trades for 12x EBITDA. SRCL in the medical waste space also handles drug recalls for pharmaceuticals and given an increasingly safety-conscious FDA, has been busier than ever. CPRT at 15x EBITDA is the ebay of trashed cars (insurance companies sell them, steel salvagers buy them) and has just set up an online exchange for used cars (don’t forget cars lose 20% of their value the second they drive out of the lot, making a “new” used car always worth the price).

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Profitable or nearly breakeven companies trading near cash or below net asset value: HLYS. Heely’s makes those shoes with wheels. $105mm market cap, $100mm cash, no debt. They are growing huge in Europe and they are about to introduce sneakers without wheels. If anyone knows where I can get one of the shoes with sheels, please tell me. PRXI, makes the “Bodies” exhibit. $100mm market cap, $3bb worth of Titanic artifacts sitting on the ocean floor. Issues with where the bodies are coming from but they settled with the NY Attorney General and may not effect the $17mm in cash flows they are generating from these exhibits. ADPT, makes storage products. $383mm market cap, $400mm net cash. The company was GAAP breakeven last quarter and non-gap they made $5.7mm in income. So somebody can buy a profitable company right now, AND put $17mm in their pockets with the excess cash. It may not be so simple but its still dirt cheap with margin of safety. SOLD, $63mm cash, $65mm market cap, breakeven to profitable business. Good play on any sort of housing snapback and zero chance they go out of business. NINE, the best B2B internet play in China. They facilitate the online process of importing and exporting goods to and from China. $69mm market cap, $115mm net cash.

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see above