Now's A Good Time To Buy Mueller Water and Walter Industries

Two portfolio holdings, Mueller Water Products (MWA) and Walter Industries (WLT), both sold off sharply late last week.

Why? Because they committed the sin of reporting strong quarterly results -- just not as strong as Wall Street expected.

So Mueller Water closed Friday at $14.23, down 10.5% for the day. And Walter ended the day at $41.18, down more than 9.5% itself for the session.

Both are bargains, in my opinion. The Mueller Water and Walter Industries' stories have been out there for several months. Anyone thinking about buying them -- and who hasn't -- should strongly consider adding them here. Some like Walter more than Mueller. You know I like having BOTH as full portfolio positions.

On a side note, The New York Times mentions Mueller in a story on corporate spinoffs:

Mueller Water Products, the dominant producer of hydrants, values and pipe fittings for municipalities, was carved out of Walter Industries, another conglomerate, in May and its stock has languished ever since. Mr. Cornell said he liked its prospects, though, especially once Walter distributes its remaining shares as expected by the end of the year.

With America’s aging infrastructure in need of fixing, Mueller, a solid moneymaker, would appear to be well positioned to handle its business alone, without having to share profits with a parent. That would be good for Mueller’s shareholders, which is the whole point of a spinoff, after all.

View my original rationales for owning Muller Water Products and Walter Industries.

WLT-MWA 1-yr comparison chart:

Comments

[Amit Chokshi]

I am looking at MWA as well but haven't done all of my due diligence yet. The shares that will be spun from WLT are Class B shares that have more voting power from what I understand. I haven't done any real research yet so I could be wrong there but that's what I've gleaned so far. Do you think the MWA shares will be a good value relative to the MWA.B shares? Or is one better off waiting for the spin to occur and then wait for the B shares to experience the usual volatility associated with spins before buying?