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Liam Garcia
Liam Garcia

Water Stocks To Buy Now

Even without that urgency, the investment case is strong for publicly traded water companies such as water and wastewater utilities, firms that make flow-control devices, and even technology and chemicals companies that play a role in sanitization services.

water stocks to buy now


"One of the driving growth theses for water to grow earnings is to invest in water infrastructure and earn attractive returns," says Timothy Winter, portfolio manager with Gabelli Funds. "We have everything from lead to older wood pipes; so that's something that must be addressed because of the implication of what gets into the water."

"The private companies, just by their very nature, are more efficient, and they are able to attract better expertise," Winter says. "By consolidating and creating efficiencies, we can lower the price of water."

Eric Kuby, chief investment officer with North Star Investment Management, expects that water utility growth will outpace that of electric and gas utilities because of water companies' regional monopolization of the supply chain.

Also, people aren't likely to curtail their demand for water much, compared with other types of utilities, because of the vital nature of the resource and because water expenses represent a small portion of household spending, Kuby says.

One of Winter's top picks is American Water Works. As the largest water utility company in the U.S., it provides drinking water and wastewater services to roughly 14 million people in 24 states. With a market capitalization of about $27 billion, the company is one of the largest of any type of utility stock and is bigger than some of the better-known electricity providers.

Another top pick of Winter's is Essential Utilities, which operates similar water and wastewater infrastructure to American Water Works but also has natural gas-related services in the U.S. for more diversification.

"When it comes to water and wastewater infrastructure, the reality is that the United States has more than 1 million miles of underground pipe, much of which is nearly a century old and in dire need of replacement," the company says.

That guidance doesn't include the company's planned $7.5 billion acquisition of water treatment company Evoqua Water Technologies Corp. (AQUA), which is expected to close in the middle of the year.

For those who prefer a one-stop shop instead of picking individual stocks, ETFs offer a diversified way to play the broader water trend in a single holding. The downside to that diversification is that ETFs probably won't perform as well as a single stock that is majorly outperforming.

The industrials sector has been doing pretty well over the past year. It was up about 3% through the end of February compared with the S&P 500's decline, and all three of these water ETFs have significant exposure to the industrials and utilities sectors.

As of November 10, 84% of the water and sewer ratings assigned by Fitch had a Stable Rating Outlook. Nearly 14% have a Positive Rating Outlook or are on Rating Watch Positive, and only 3% have a Negative Rating Outlook or are on Rating Watch Negative. The global functional water market was worth $15.1 billion in 2022. Moving forward, IMARC Group forecasts the market to reach $24.8 billion by 2028, indicating a growth rate of 7% during 2023-2028.

Concerns of economic slowdown, the war in Ukraine, lockdowns in China, and the threats of stagflation facing the global market are pressuring the water industry players to be highly vigilant, control costs, and adopt cutting edge technology. The water sector is one of the most defensive plays in the current market, as demand for drinking water and other water services will never diminish regardless of the economic backdrop. As investors actively seek out defensive equities to secure their portfolios, they can benefit from the water industry, which is ever evolving. The global population has recently hit 8 billion, which means demand for water will continue to increase. To benefit from the growing sector, some of the best water stocks to invest in include American Water Works Company, Inc. (NYSE:AWK), Essential Utilities, Inc. (NASDAQ:WTRG), and Primo Water Corporation (NYSE:PRMW).

Artesian Resources Corporation (NASDAQ:ARTNA) was founded in 1905 and is headquartered in Newark, Delaware. The company provides water, wastewater, and other services in Delaware, Maryland, and Pennsylvania. It distributes water to residential, commercial, industrial, governmental, municipal, and utility customers. Additionally, Artesian Resources Corporation (NASDAQ:ARTNA) specializes in wastewater collection, treatment infrastructure, and wastewater services for customers in Delaware.

Like American Water Works Company, Inc. (NYSE:AWK), Essential Utilities, Inc. (NASDAQ:WTRG), and Primo Water Corporation (NYSE:PRMW), Artesian Resources Corporation (NASDAQ:ARTNA) is one of the best water stocks to invest in.

The York Water Company (NASDAQ:YORW) was incorporated in 1816 and is based in York, Pennsylvania. The company impounds, purifies, and distributes drinking water. It owns and operates wastewater collection systems, wastewater treatment systems, reservoirs, water pipelines, and groundwater wells. The York Water Company (NASDAQ:YORW) serves customers in the fixtures and furniture, electrical machinery, food products, paper, ordnance units, textile products, air conditioning systems, laundry detergents, barbells, and motorcycle industries. The York Water Company (NASDAQ:YORW) is one of the best water stocks to invest in.

SJW Group (NYSE:SJW) provides water utility services in the United States. It specializes in the production, purchase, storage, purification, distribution, wholesale, and retail sale of water and wastewater services. SJW Group (NYSE:SJW) was incorporated in 1985 and is headquartered in San Jose, California. SJW Group (NYSE:SJW) paid a $0.36 per share quarterly dividend to shareholders on December 1. It is one of the premier water stocks to monitor.

UBS analyst Gregg Orrill initiated coverage of SJW Group (NYSE:SJW) on November 30 with a Buy rating and an $85 price target as part of a broader research note on Water Utilities titled "Looking for Value". Water utilities have attractive characteristics for a defensive market backdrop and offer optimistic fundamentals, including 7% EPS growth potential and meaningful investment opportunities from pipe replacement and water access, the analyst wrote in a research note. He added that stock trades at a 5% discount to the sector on a price to earnings basis despite higher regulatory clarity than its competitors and an adequate water supply.

Middlesex Water Company (NASDAQ:MSEX) was incorporated in 1896 and is headquartered in Iselin, New Jersey. The company owns and operates regulated water utility and wastewater systems. It operates in two segments, Regulated and Non-Regulated. The company provides water services on a retail and wholesale basis to residential, commercial, industrial, and fire protection customers, in addition to providing regulated wastewater systems in New Jersey and Delaware. It is one of the best water stocks to consider.

In addition to American Water Works Company, Inc. (NYSE:AWK), Essential Utilities, Inc. (NASDAQ:WTRG), and Primo Water Corporation (NYSE:PRMW), California Water Service Group (NYSE:CWT) is one of the premier stocks for exposure to the water sector.

It is only natural for investors to consider purchasing water stocks. There are many different companies that can give investors exposure to the water business, such as water utilities. Some other companies are engaged in water purification.

American Water Works is the largest and most geographically diverse, publicly traded water and wastewater utility company in the United States, as measured by both operating revenues and population served. The company provides drinking water, wastewater, and other related services to over 15 million people in 46 states.

Its regulated business includes 53,500 miles of pipe, 490 water treatment plants, 175 wastewater facilities, 1110 wells, and 73 dams. The company also provides water and related services to the U.S. government and U.S. military through 17 installations.

Roper Technologies is a specialized industrial company that manufactures products such as medical and scientific imaging equipment, pumps, and material analysis equipment. Roper Technologies also develops software solutions for the healthcare, transportation, food, energy, and water industries. The company was founded in 1981, generates around $5.4 billion in annual revenues, and is based in Sarasota, Florida.

It has two business segments: regulated utilities (natural gas, electric, and water) and non-regulated renewable energy (wind, solar, hydro, and thermal). Combined, its entire portfolio has 4.3 GW of generating capacity that it aims to achieve 75% renewable energy generation by 2023.

Not all the water stocks on this list receive buy recommendations at this time, as some appear to be overvalued today. But all the water stocks on this list pay dividends and are likely to increase their dividends for many years in the future.

Rye-Brook, New York-based Xylem (ticker: XYL) is a leading water technology company making pumps, valves, filters, and meters for industrial and utility customers. Sales in 2022 are expected to be $5.4 billion, which is significant for a pure-play water company. By comparison, DHR ) water business, which it plans to spin off later this year, generates about $5 billion inside a mammoth $200 billion market-cap industrial and health conglomerate.

Out west, low levels of rainfall have caused key water sources such as the Colorado River to come up short of normal levels, leading to scarcity and rationing. And now, with the winter storms and cold this December, water levels have hit historic lows in numerous lakes in the east, putting water availability into question as well as jump-starting water stocks.

Valmont is a play on water because it sells a variety of devices used in irrigation for agricultural purposes. The agriculture market saw some additional demand in 2022 following the Russian invasion of Ukraine, which caused farmers to plant more heavily in other parts of the world. 041b061a72


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