Hold - Price 20.90 on Feb. 11
by Morgan Joseph

Watts reported 4Q08 EPS a penny shy of our estimate, on lower sales but higher margins. Macroeconomic headwinds continue to curtail end-market demand, which could cause '09 revenue to decline by a low-teens percent y/o/y. WTS announced more restructuring initiatives, [mostly] related to closing three plants.... The consolidation is expected to net roughly $17.2 million in after-tax charges in '09 and...about $4.8 million in annual after-tax savings....Our 2009E-EPS becomes $1.64, down from $1.95. Our initial 2010E-EPS is $1.90....WTS shares are trading at 12.7 times our 2009E-EPS of $1.64, which we believe is appropriate .... Market cap: $720 million.

14.5 PE; P/B 1.36; 23.8% Annual EPS Growth; 8.5% 5 Yr. Div Growth

Watts is a company with a fairly strong performance record and should continue to be a leader in the industry

a premier water utility beaten up at end of quarter essentially gets nicer and nicer as it goes down.

I am questioning this pick but I do think this is going to have some growth.

sml cop water

H20

water

emerging market water infrstructure growth

Another water stock, this one is still very much levered to US housing.

China, the middle east, India... countries along the equatorial belt, are your growth markets for water stocks. WTS has 3 factories in China. While China sales are only about 4% of total, they are growing at 80 - 100% per year.

Long 600 shares from 36.06.