Mueller Water Products (MWA) is a leading maker and supplier of a broad range of water infrastructure and flow control products for use in water distribution networks, water and wastewater treatment facilities, gas distribution systems and fire protection piping systems. These are the kind of companies we really like: boring business but solid fundamentals. The stock, which sells at a small premium to book value, has been suffering due to fears about the housing market slump but experts agree the water business is becoming more and more important globally and that that water infrastructure in the U.S. is going to need major repair in the near future. Mueller is definitely an interesting way to gain some exposure to the water industry - this is a solid play. Furthermore, we do not regard the Short % of Float @ 41% as an issue, in fact, it will potentially provide a spike in price as shorts will be forced to cover and accelerate the long-term growth of the stock price. We currently feel the B shares (MWA.B) are extremely interesting at 15.49 USD. With the current spread between the two classes of stock at approximately 1,40 USD, the MWA.B shares are currently trading at quite a substantial discount. There is no logical reason for this difference. If anything, the B shares should be worth more due to the added voting rights. Once again, Mr. Market is offering a good opportunity for the Enterprising Investor to profit from irrational pricing.

Coeur D’Alene Mines Corp Idaho (CDE) primarily explores for silver, gold, lead, and zinc deposits. It does so either directly or through wholly-owned subsidiaries and owns leases and has interests in certain exploration-stage mining properties located in the United States, Chile, Argentina, Bolivia and Tanzania. Not only is this a play on the fact that the world has nearly run out of silver but it is also interesting as a hedge against economic downturn and the current pressure on financial markets and the USD. Today, Silver may be one of the best investment opportunities out there. We feel that practically all of the fundamentals are in place for e serious move in the stock price not only in the coming months but years to come. Some interesting figures: * Net Working Capital: 3.27 * Fixed Working Capital: 1.90 * Current Ratio: 16.78 * Interest Coverage: 0 * Quick Ratio: 15.02 * Cash Ratio: 14.54 * ROA: 10.44 * ROE: 16.35 * Net Margins: 34.82 * Operating Margins: 30.01 We currently believe that at 3.58 USD the shares are very interesting (average current analyst target price is 5.49).

Select Comfort (SCSS) is a developer, manufacturer and marketer of premium quality, adjustable-firmness beds. The air-chamber technology of its Sleep Number bed allows adjustable firmness on each side of the mattress and provides a sleep surface that is clinically proven. They are one of the leading brands of premium mattresses; one of the big three and have been a good growth story but the stock has been suffering lately. Until now, the main drivers have been their focused management, superior products and a very good distribution system. Unfortunately, sales have started to slow and the current economic climate is not favorable to this industry, especially a producer of high-end premium products. Adding to all this, Select Comfort has been struggling with their marketing which seems to be one of their biggest weakness: compounded by their complicated product line-up. We have started to question management effectiveness due to recent events like conference calls comments, failure to address the marketing issue and a recent interview with the CEO where he seems be focusing on international expansion and acquisitions, instead of fixing the difficult situation in the US (which he seems to be downplaying). As the FT article suggested, we agree that the company could be a takeover target. A quick look at SCSS shows a great product, no debt, lots of cash, excellent distribution system, good returns and decreasing insider ownership. The main problem seems to be that management has lost overall focus and has repeatedly failed to solve the greater marketing issue. Again, the fundamentals remain strong and we feel it is just a question of time before the stock price recovers. Trading under 17 USD and having hit 16.68 USD (52 week low) this company is definitely worth a look. Since our recent post, the stock price has actually gone down almost 4%. Has anything fundamental changed with SCSS? Not really, we still feel that the main issue is the President and CEO, Mr. Bill McLaughlin. Just a small recap of some of the key figures: * Price is very close to a all time low valuation (P/E of 19 and Forward P/E of 16.2). * Company has no long-term debt to speak of. * 5 year ROA 21.33% vs. 4.24% industry average. * 5 year Net Margin 7% vs. 3.99% industry average. * 3 year Revenue Growth 20.7% vs. 9.71% industry average. * 10% Pre Tax Earnings Yield. * Large percentage of shares are owned by insiders. As per our first post, we understand that SCSS is facing some issues (management focus, marketing, etc..) but at recent levels, a true value investor should definitely take a very close at this company.

Precision Drilling Trust (PDS) through its subsidiaries, provides contract drilling, service rig, and ancillary services to oil and natural gas exploration and production companies in the United States and Canada. The share price is down over 45% from a year ago, pushed down by a taxation change implemented by the Canadian government on trusts, the current economic climate and the fact that the second quarter is seasonally the weakest for all drillers in Western Canada. The company has demonstrated that it has a strong business model and management has repeatedly shown that they are capable of creating value and returning it to shareholders. Most recent dividend paid was of 1.95 USD which amounts to an annual yield of 7.6% and consensus is that it is very likely to grow to 9% over the next 3 to 5 years. They have recently been trading just under 25.50 USD. Considering the above comments, the divided yield, future outlook and the fact that we have seen “fair value” estimates at over 60 USD – we feel that PDS could be an interesting company to invest in at this moment in time.

Safety Insurance Group Inc. (SAFT) is a provider of private passenger automobile insurance in Massachusetts and offers a portfolio of property and casualty insurance products, including commercial automobile, homeowners, dwelling fire, and umbrella and business owner policies. SAFT recently suffered from a big drop due to a small earnings miss, an out of favor sector and uncertainty surrounding Massachusetts auto insurance regulation. We feel that the correction was far too server and that this is an undervalued company with good management, a clear strategy and solid fundamentals. Ideally we should have reacted quicker when the share price dipped to 38 USD but even at current levels the company offers a very good value proposition.

Johnson & Johnson (JNJ) is engaged in the research and development, manufacturing and sale of a range of products in the health-care field. Johnson & Johnson has more than 250 operating companies and operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. With increasing speculation on the fact that we are reaching the top of the present bull market, we thought that we would take a look at some more conservative stocks. Assuming that we are looking to remain invested in the stock market, where could we put our money? JNJ is not trading at 30% under fair value and is not set to sky rocket in the near future. However, it presents a chance to own one of the best blue chip companies in the market and a company that has been shaping the health-care system for over 120 years. Furthermore, we are confident that it will continue to do so, profiting from the expected growth and importance of this sector in years to come. In summary, this is an ideal long-term play for any portfolio. JNJ is a blue chip company that: * Operates in one of the fastest growing sectors in the global economy. * Has great balance sheet with a track record of strong performance and healthy dividends. * Is trading at a very reasonable multiple. * Presents reduced risk in case of an upcoming market correction. Furthermore, for followers of Warren Buffett, Johnson & Johnson represents over 5% of Berkshire Hathaway portfolio.

Some readers might be surprised to see us writing about an ETF but we feel that iShares MSCI Japan Index (EWJ) allows investors to try to exploit two different value plays at once: 1. Strengthening of the Yen and therefore rally against the USD and the Euro. 2. Shift of investor sentiment vs. Japan and therefore influx of funds in to the Nikkeï. Despite the Bank of Japan refusing to raise interest rates; afraid that they could send the economy into recession, the overall picture seems quite positive. Economic growth is good, reaching 3,3% in the last quarter and latest consolidated figures for company profits increased 12% vs. last year. These figures suggest that, if the recent pattern is confirmed, the Bank of Japan will have to raise interest rate and in turn, the market should react at an accelerated pace (please note that, as opposed to other indexes around the globe, the Nikkeï is still far from all time highs). We believe in the long-term potential of Japan.

Openwave Systems (OPWV) provides software products and services for the communications and media industries worldwide. It developed much of the technology behind the wireless application protocol (WAP) standard. Openwave has been suffering due to losses in their server and client business, increasing buy-out speculation and the fact that they withdrew guidance for third and fourth fiscal quarters. In addition to this, shares have also experienced increased volatility due to the expiry of the tender offer from Harbinger Capital to increase their 13,4% stake to 49%. This is an extremely interesting company that has significantly contributed to the wireless world as we know it and that will continue to be a key player in the future. We feel that the correction is not justified and that at 6,18 USD, the shares are currently on sale. Furthermore, the buy-out chapter is far from being closed, they confirmed that they had retained Merrill Lynch as a financial adviser to explore strategic alternatives, including a possible sale and Hewlett-Packard, Nokia, Microsoft, Private Equity or even Harbinger could still surface as potential buyers. As Warren Buffett said: ” We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful”