The leaking residential construction market is still taking its toll on Mueller Water Products (NYSE: MWA) (NYSE: MWA-B), though the company seems to be fixing the leaks.

Fiscal 2008 first-quarter results weren't stellar, but they were in line with Mueller's goal of readying itself for the next construction upswing. While the company reported a net loss of $1.6 million, or a penny a share, that includes some $16.2 million in restructuring charges, or $0.08 a share after tax, in connection with the closure of the U.S. Pipe segment's iron operations in New Jersey. That stacks up against $0.15 in profits in the fiscal 2007 first quarter.

As it now stands, this 2006 spin-off from Walter Industries (NYSE: WLT) commands a market valuation of around $1 billion, more than 55% off its 52-week high. But the market seems to like Mueller's progress toward fixing the ship, as shares are up around 7% since last week's announcement.

Mueller is having a tough go, but investors can take heart that the company offers the industry's widest product line and that most of the company's products occupy the No. 1 or No. 2 spot in their respective markets. Additionally, the company has one of the largest existing installed bases of fire hydrants -- approximately 3 million -- which helps Mueller generate recurring revenue streams from the need of replacement components.

Mueller isn't alone in feeling the housing pinch; home improvement gorillas and Mueller product distributors Home Depot (NYSE: HD) and Lowe's (NYSE: LOW) have also taken it on the chin as of late. Despite Mueller's recent struggles, though, the company's strong market position, able management, and our never-ending need for water all make Mueller look like a solid bet to tap for years to come.

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