This Is the Best Water Stock to Buy in 2018

Water is one of life's necessities, making it an ever-growing investment opportunity. And today, we're giving you the best water stock to buy in 2018.

Money Morning Executive Editor Bill Patalon first alerted readers about this water stock in 2013, when it was trading for $34.53 per share.

Best water stock to buy in 2018

At yesterday's (March 20) opening price of $78.31, that's a gain of 126.78% in just five years. In comparison, the Dow Jones Industrial Average has climbed just 53.37% during that same time.

Now, you may think that the best this company has to offer is in the past, but that is far from the truth. Even if you didn't believe that this was among the top water stocks to watch in 2013, there are still profits ahead for shareholders.

In fact, one firm believes it could climb another 14.92% over the next 12 months.

Remember, that's just the next 12 months. This is a stock you're going to want to keep for the long haul. After all, water will never go out of demand.

But the demand is even more urgent than you might think. We are on the brink of a full-fledged water crisis, and the company we are about to show you will be essential to solving it...

The Impending Water Crisis

While this planet is covered with water, just 2.5% of the earth's water is freshwater, which is what we need to drink, bathe, cook, and grow food.

And just 1% of that freshwater is easily accessible.

Take Cape Town's current water crisis, for example. 

Beginning in 2015, the Western Cape province of South Africa started experiencing a severe water shortage.

The conditions have been caused by several years of low rainfall levels, where the period from 2015 to 2017 was the driest since 1933.

The city has established water-saving measures, but they aren't enough to save it from what is now being called "Day Zero." This is the time when the area's dam levels reach 13.5% of capacity, meaning the taps will have to be turned off.

As it stands today, Day Zero is expected to arrive on July 15, although some are predicting the day could happen as early as April.

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The population of Cape Town has been forced to live on just 50 liters of water each day. This means that no baths are allowed, showers must be limited to 10 liters, and a home's toilet can be flushed just once daily.

When Day Zero does arrive, residents of Cape Town will be in an even more dire situation, as they will have to queue up for their daily water allotment.

Unfortunately, South Africa isn't the only place with water issues... 

Even in the United States, major parts of the country's water infrastructure need significant improvements.

The National Resource Defense Council rates drinking water resources in major cities such as San Francisco and Atlanta as "fair to substandard."

Back in 2011, the U.S. Environmental Protection Agency (EPA) released a report on the nation's drinking water resources and concluded that it would take an investment of $384 billion over two decades to upgrade and modernize the U.S. wastewater and water systems.

The American Water Works Association (AWWA) also studied that issue, and its analysis found that it's going to take closer to $1 trillion over 25 years just to restore deteriorating underground pipes.

Fortunately, some companies are working to solve these substantial problems.

Our top pick in this sector is positioned to not only solve many of these issues, but it will handsomely reward shareholders at the same time...

The Best Water Stock to Buy in 2018

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Xylem Inc. (NYSE: XYL) is the best water stock to own this year. The company is a global player in the water market, across all aspects of the industry.

According to Patalon, Xylem is such a great play because it covers every stage of the water cycle with is its five "growth sectors" of treatment, dewatering, transport, applied water systems, and analytics.

The company also offers data management, remote monitoring, and cloud-based analytics.

Xylem is based in New York, but it has operations and services that reach across Asia and Europe. On Jan. 30, the company debuted a new service hub and pump rental operation in the Philippines, according to reports from

The Philippines have ongoing issues with tropical cyclones and heavy storms, and Xylem's new hub will produce the flood-control equipment that is desperately needed throughout the country.

It will also sell dewatering services and pumps for the country's power generation infrastructure and mining operations.

And with the international reach that Xylem has, other analysts are just as bullish about Xylem's future as Patalon...

Investment bank Boenning & Scattergood has given XYL a 12-month price target of $90 per share.

From yesterday's price of $78.31, that would produce a potential gain of 14.92% for this lucrative water stock.

That profit opportunity doesn't even include the company's dividend payout of $0.84, which equates to a yield of 1.07%.

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