JBL: The Last Drop

In the first quarter of 2005, Pentair's water revenues were $512 million, up 63% year over year. Pentair is benefiting from the Wicor acquisition and growth in North America and China.

Pentair is more than 20% off of its 52-week high of $46.47. It has a forward multiple of roughly 18 based on consensus estimates of $2.20. Put a more realistic 21 multiple on this stock, and you have it reaching its 52-week high again. That is a 20%-plus gain.

I do not currently own shares of Pentair; however, I have set aside 5% to 10% of my portfolio this year for water stocks, and Pentair will most likely be the first.

There are other ways to play the coming water boom. Insituform Technologies is a fantastic company with a great product. It has the ability to fix pipe while still in the ground. The only problem is this company's price is way too far ahead of itself. It may look cheap at less than $20 per share, but not when you look at its trailing P/E of more than 220.

High Flier

On Nov. 5, I recommended Gol Linhas Aereas Inteligentes (GOL). The stock price has appreciated more than 35% since then.

This week, Gol increased 2006 guidance for net revenues, earnings per share and operating margins. This is a great stock, the best airline stock in the world. If you own it here, I wouldn't sell it. However, I think I would wait for a pullback to become a buyer.

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