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Tags: Commodities

Water Stocks: Don't Overlook This $1 Trillion Opportunity

By David Zeiler, Associate Editor, Money Morning • @DavidGZeiler • February 6, 2013

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With most water delivery systems badly in need of repair or replacement, companies that supply the solutions figure to profit handsomely - making now a good time for investing in water stocks.

In the United States alone, estimates of water infrastructure needs run as high as $1 trillion.

Many of the pipes that carry water to U.S. residents are more than 60 years old, with some more than 100 years old. Water main breaks and sinkholes from leaking pipes are common in many U.S. cities.

Water infrastructure is in such bad shape that the nation's pipes leak 1.7 trillion gallons every year. The water lost in a single day is enough to supply the entire state of California.

Pressure to spend more money on the nation's water infrastructure is increasing. This week the National Association of Water Companies and U.S. Chamber of Commerce launched a campaign, "Water Is Your Business," to draw more attention to the problem.

And the public is already on board.

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In a recent survey taken by water infrastructure company Xylem Inc. (NYSE: XYL), 88% of those polled said the government should be investing in water infrastructure, and 65% said they would accept slightly higher monthly water bills to pay for it.

With the need reaching a critical stage and pressure to act building, U.S. government spending to repair water infrastructure is bound to increase very soon and very rapidly, a golden opportunity for water stocks.

But the opportunity extends beyond the United States. The World Water Council says that current annual infrastructure spending of about $80 billion will double just within the next several years.

And rising global demand for water, driven by population growth, adds even more urgency to the problem.

The United Nations estimates that freshwater withdrawals have increased threefold over the past 50 years, as demand rises by 16.9 trillion gallons every year.

"A billion people lack access to clean water," Bank of America Merrill Lynch wrote in a recent research note explaining why it likes water ETFs. "Water is undergoing pressure both on the supply and demand side."

In the years to come, as governments around the world start spending the hundreds of billions of dollars needed to address these problems, money will flood into water stocks.

Investing in Water Stocks

Perhaps because water is among the most common of commodities, many don't even consider investing in water.

But the effort that goes into making water available to billions of people - storage, making it potable, getting it to users reliably - are all profit opportunities.

While some water stocks have become overbought over the past six months, here are five water stocks that should be good buys now:

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David ZeilerDavid Zeiler

About the Author

Browse David's articles | View David's research services

David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.

Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.

Dave has a BA in English and Mass Communications from Loyola University Maryland.

… Read full bio

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Shlomo Greenberg
Shlomo Greenberg
10 years ago

I follow water investment for over 20 years and belive that the Pictet Water Funds, PICWAPA:LX, is the best representative of this niche

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matthew
matthew
10 years ago

how do I invest

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F Peabody
F Peabody
9 years ago

Problem is that there are very few pure play water stocks out there — many of them are only indirectly benefiting from this boom.

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Joseph Blowinski
Joseph Blowinski
8 years ago

You've got to be kidding, leaving out AWK, AWR, WTR and others.
Who is paying you to promote these companies?

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Jodri sans
Jodri sans
7 years ago

Very nice article i believe LGYV deserves to be among the sotcks discussed in this article.. They just came out with a boxed water that come in much more eco-friendly packaging than traditional bottled water and everybody from Jaden Smith to leann Rimes are hoping on board.

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sss
sss
7 years ago

Buy BRWC as soon as possinle

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Reply


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