Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21
Investing in Google Deep Mind AI 2021 (Alphabet) - 6th Apr 21
Which ETFs Will Benefit As A Stronger US Dollar Reacts To Global Market Concerns - 6th Apr 21
Staying Out of the Red: Financial Tips for Kent Homeowners - 6th Apr 21
Stock Market Pushing Higher - 6th Apr 21
Inflation Fears Rise on Biden’s $3.9 TRILLION in Deficit Spending - 6th Apr 21
Editing and Rendering Videos Whilst Background Crypto Mining Bitcoins with NiceHash, Davinci Resolve - 5th Apr 21
Why the Financial Gurus Are WRONG About Gold - 5th Apr 21
Will Biden’s Infrastructure Plan Rebuild Gold? - 5th Apr 21
Stocks All Time Highs and Gold Double Bottom - 5th Apr 21
All Tech Stocks Revolve Around This Disruptor - 5th Apr 21
Silver $100 Price Ahead - 4th Apr 21
Is Astra Zeneca Vaccine Safe? Risk of Blood Clots and What Side Effects During 8 Days After Jab - 4th Apr 21
Are Premium Bonds A Good Investment in 2021 vs Savings, AI Stocks and Housing Alternatives - 4th Apr 21
Penny Stocks Hit $2 Trillion - The Real Story Behind This "Road to Riches" Scheme - 4th Apr 21
Should Stock Markets Fear Inflation or Deflation? - 4th Apr 21
Dow Stock Market Trend Forecast 2021 - 3rd Apr 21
Gold Price Just Can’t Seem to Breakout - 3rd Apr 21
Stocks, Gold and the Troubling Yields - 3rd Apr 21
What can you buy with cryptocurrencies?- 3rd Apr 21
What a Long and Not so Strange Trip it’s Been for the Gold Mining Stocks - 2nd Apr 21
WD My Book DUO 28tb Unboxing - What Drives Inside the Enclosure, Reds or Blues Review - 2nd Apr 21
Markets, Mayhem and Elliott Waves - 2nd Apr 21
Gold And US Dollar Hegemony - 2nd Apr 21
What Biden’s Big Infrastructure Push Means for Silver Price - 2nd Apr 21
Stock Market Support Near $14,358 On Transportation Index Suggests Rally Will Continue - 2nd Apr 21
Crypto Mine Bitcoin With Your Gaming PC - How Much Profit after 3 Weeks with NiceHash, RTX 3080 GPU - 2nd Apr 21
UK Lockdowns Ending As Europe Continues to Die, Sweet Child O' Mine 2021 Post Pandemic Hope - 2nd Apr 21
A Climbing USDX Means Gold Investors Should Care - 1st Apr 21
How To Spot Market Boom and Bust Cycles - 1st Apr 21
What Could Slay the Stock & Gold Bulls - 1st Apr 21
Precious Metals Mining Stocks Setting Up For A Breakout Rally – Wait For Confirmation - 1st Apr 21
Fed: “We’re Not Going to Take This Punchbowl Away” - 1st Apr 21
Mining Bitcoin On My Desktop PC For 3 Weeks - How Much Crypto Profit Using RTX 3080 on NiceHash - 31st Mar 21
INFLATION - Wage Slaves vs Gold Owners - 31st Mar 21
Why It‘s Reasonable to Be Bullish Stocks and Gold - 31st Mar 21
How To Be Eligible For An E-Transfer Payday Loan? - 31st Mar 21
eXcentral Review – Trade CFDs with a Customer-Centric Broker - 31st Mar 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Investing in Water Stocks: Three Names to Buy Right Now

Companies / Water Sector Mar 27, 2012 - 07:09 AM GMT

By: Money_Morning

Companies

Best Financial Markets Analysis ArticlePatrick Vail writes: You've no doubt heard about the building scarcity of water. It's the reason savvy shareholders have been busy investing in water stocks.

Here's why.

Water may be everywhere but only 3% of it is fresh or suitable for drinking. Two-thirds of that is locked in glaciers and polar icecaps, which means less than 1% of the world's fresh water is available for human use.


That's the water found in lakes, rivers, reservoirs, and underground sources shallow enough to be accessed cheaply. Even still, much of that is polluted or otherwise unsuitable for consumption.

The water that's left is then used in agriculture and industry, and here's the kicker: It is divided between seven billion people... and demand is increasing all the time.

According to the United Nations, in the last century water use has increased at more than twice the rate of population growth.

Water has become so critical that Willem Buiter, chief economist at Citigroup, believes it will soon become "the single most important physical-commodity based asset class, dwarfing oil, copper, agricultural commodities and precious metals."

That may be hard to imagine, considering we can simply turn on the tap and get fresh water for next to nothing.

But it's true. There are myriad of factors-from population growth to climate change-putting a strain on the world's water supply and causing demand to spike.

We'll look at those factors and how investors can benefit from this growing demand by investing in water stocks.

Investing in Water Stocks: Profit From Rising Demand
The biggest factor in the increasing scarcity of water is agriculture.

In 2012, American farmers will plant more crops than in any year since World War II. After two years of declining yields, this is good news for the agriculture industry, which is seeing commodity prices rise right along with global demand.

Around the world, the picture is much the same. China and India, too, are planting more this season.

The gigantic thirst for agricultural commodities this year means it will also be a huge year for water usage.

According to a study conducted by the University of Twente in the Netherlands, agricultural uses account for 92% of the global water footprint, a broad measurement that aims to quantify global water use and consumption.

What's more, fresh water pollution from agriculture is a worldwide problem that causes billions of dollars in damage. In developing countries, where fewer environmental regulations exist to protect the water supply, nitrate and phosphate levels are expected to rise steadily over the next few decades.

That will put further strain on the water supply - right in the places where demand for water is expected to increase the most. That means emerging markets.

That's because on average, each person in the U.S. uses 100 to 150 gallons of water every day, according to the Environmental Protection Agency. But in places like China and India, the average is closer to 20 gallons per day.

In fact, China and India already have the two largest water footprints of any country on the planet. And they're about to get even bigger as their consumption of commodities skyrockets - water included.

The surging demand for water in these emerging markets is going to require better "water solutions," or innovative ways of filtering and treating water to make it drinkable.

Better infrastructure to deliver fresh, clean drinking water to billions of new middle class citizens is also going to be needed, including filters, pumps, pipelines, and new processing plants.

That makes the growth in water stocks inevitable as billions of dollars is spent to meet demand.

Given the scarcity, the sums are tremendous.

According to the Organisation for Economic Cooperation and Development (OECD), global investment in water supply infrastructure needs to increase by nearly $500 billion by 2025.

While some of that money will go to fixing aged infrastructure in the West, much of it is going to be needed to manage increased demand in emerging markets like Asia, Latin America, and Africa.

Three Ways to Invest in Water Stocks
A great way to gain exposure to water stocks is to buy companies that deliver it.

Water utilities have provided a great defensive position for the past few years, but their value is going to rise in tandem with demand for water. (Keep in mind that some companies operate in a regulated environment, which usually means there's a cap on how much a utility can charge for delivery.)

One quality company is Brazilian utility Companhia de Saneamento Basico do Estado de Sao Paulo (NYSE ADR: SBS).

SBS provides water and sewage services to nearly 24 million people in the state of Sao Paolo. The company has a market cap of over $8.6 billion, a very attractive P/E of 11.86, and a nice yield of just over 4%.

SBS has been on a tear since the start of 2012. Its share price has spiked 34% to $75.74. Given SBS is located in one of the world's best markets for growth, its excellent financials, and, of course, rising demand for water, the company can go higher still.

Another way to invest in water is through companies that create solutions to the problems of tapping, pumping, filtering, and delivering water to millions.

Pentair Inc. (NYSE: PNR) is a global water solutions company that manufactures water pumps, irrigation and crop spray equipment, marine pumps and accessories, filtration, softener, and deionization products and systems, and mid-to-large fluid management products and applications.

Basically, PNR is solving the problem of delivering drinkable water to customers around the world.

PNR's revenue grew by 14.83% during the most recent quarter, from $753.86 million to $865.69 million. And the company's expanding in the right places, with revenues in Latin America and China jumping 18% and 26%, respectively in 2010. With the coming growth in developing economies, PNR could go sky high.

Perhaps the easiest way to invest in water stocks is through the PowerShares Global Water Fund (PIO).

It's an exchange-traded fund that uses the Nasdaq OMX Global Water Index as a benchmark to track companies creating products designed to conserve and purify water for homes, businesses, and industries.

The fund invests in an array of stocks, including utilities and other management and delivery companies, equipment manufacturers, and solutions companies, so PIO is diverse. Sixty-five percent of the fund is invested outside the United States, in places where we know growth is healthy, like Singapore and Brazil.

Either way, you don't realize the wealth of the water until it's gone. Investing in water stocks is going to be one of the market's great long-term trends.

[Editor's Note: Chief Investment Strategist Keith Fitz-Gerald actually recommended Pentair Inc. to subscribers of our premium service Private Briefing back in early September.

The stock has already risen 18% since then -- with more to come, as this report shows.

If you'd like to receive those early recommendations from our experts - and in the process receive $26,000 worth of our best trading-service advice for just $5 - check out Private Briefing by clicking here.]

Source :http://moneymorning.com/2012/03/27/forget-goldman-sachs-only-fools-rush-in/

Money Morning/The Money Map Report

©2012 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules