Is Water a Good Investment


As the problems of water-related issues become more serious every year, water becomes more valuable as a commodity and a powerful influence on investors in a worldwide market. Is water a good investment?

Like any commodity, the less you have of it, the more valuable it is. That’s certainly the case with water, one of the world’s most precious resources is becoming dangerously in trouble from Scarcity, global warming & population. Yet Water Stocks are regarded as safe & unaffected by events.

Take Dr. Michael Burry, played rather eccentrically by the actor Christian Bale in the 2016 film, “The Big Short.” In real life, Burry invests in water and the evidence shows that he and other aqua investors are onto something.

Is Water a Good Investment

Being where we live in the United States we enjoy many things most of the world doesn’t and take advantage of some of the normal things that are taken for granted that most people on the earth consider a luxury in their part of the world. Water is our most precious resource no matter where you are on earth.

Most tourists know that once you turn on the tap anywhere south of the border could be a roll of the dice. There are a few ways of looking at this and one way is that a person can capitalize on this situation by helping out the part of the world that needs clean water for drinking and health that is so important for the communities involved with these criticizes that happen in many areas of the world.

The problem the world faces with Water Scarcity, especially in a place like India creates an advantage, unfortunately, any commodity like oil and food that becomes scarce like a late frost in early spring that kills off oranges with any problem opens a door for investors who can afford to capitalize on it. It’s just Supply and Demand. If an average person can see what the future lies for the world and water, anyone can see the value of what water can hold in the next decade or longer.

There will be solutions God willing and investing in those new technologies can only help to bring those solutions to fruition. Bringing water to places where it’s needed the most and treatment processes that will increase success.

Global Water Resources Stock

There are a few ways that people can get involved in investing in water as a product or an industry that can utilize the earth’s problems while capitalizing on them to broaden their investment opportunities.

  • One way is to look for water-deprived countries in undeveloped countries

    Water investment Stock Photos, Royalty Free Water investment Images |  Depositphotos
    Water investment
  • Look into companies that sell Bottled water industries
  • Look into companies that build and operate water treatment facilities
  • That clean fresh water can be shipped to a location in these countries or delivered as we do it in the state’s building to building home to home where there is existing infrastructure or new urban areas that are building that infrastructure along with a new city.

Companies that are popular now are Watts Water and Aqua America. In India, China, and Asia clean drinking water is at the very top of their list for development in the future. Water and Wastewater treatment plants are being built and invested in for short-term and long-term government and commercial projects that are looking for backing now and in the future that are looking for money.

This type of investing here in the US is considered unconventional because new buildings are normally built on top of existing infrastructure. Where here these have to be built and constructed from scratch.

In the future look to places that don’t have clean water or dirty water that needs to be cleaned and serviced before communities can be built or grow to areas where water will be scarce or unsafe.

Some of these world-sized water companies that the ones that should be invested in are companies like Pepsi-Cola or Nestle. They also include Beer companies that use filtration instruments and equipment that are state of the art because they have to clean the water they use in their product for the same reasons consumers use to clean drinking water that is questionable throughout the world. So when thinking about investing in water think about big companies that also have to use large quantities of clean water to make their product.

How To Invest In Water Commodity

Because of rising water issues and demands in the next 30 or 40 years of increasing water demand its importance will grow to an incredible value that will no doubt be a huge important non-risk investment for even the small investor with not much to gamble with.

With the global population expected to grow more than 40% by the year 2050, More of the world’s standards of living transitioning to higher standards of living, and widespread water issues demands needed to meet those supplies will be harder and harder to accomplish. It almost is impossible. How does bottled water compare to Virgin Pure? - Virgin Pure

Only 2.5 % of the water supply is fresh and less than 1 % of that water is accessible as surface water the rest is locked up into glacier ice and underground and underground aquifers. 

Rising temperatures increase population and demand will snowball this water demand will be expected to affect half the world’s population.

  • North America has 15 % of that freshwater supply with only 8% of the world’s population.
  • China has about 7% of the world’s water supply and up to 21% of the world’s population.

There are estimates of up to a billion people living without clean drinking water. By 2525 more than half the world’s population will be in water-stress situations and with these problems comes political economics and disputes that can lead to starvation and war. It won’t take long for nations around the world to conclude that the earth is in trouble.

Most water use is now processed to feed the nations in dry countries which leads to higher food costs burdening people who are already in third-world arid nations. The solutions are high-tech processes like Desalinization or sustainable farming techniques like drip irrigation. These solutions can take years to replace the ones that are in place right now.

Without water, the earth will have geopolitical implications that change the way the world will live and think. This will turn water into a commodity. There are places here in the States that will have immediate implications so the problem just won’t be in the African plain where the topsoil will be dryer than moon dust.

As stewards of the earth, we have got to find ways to help decline the situation so the next generations will be saved from this. Investing in new agricultural methods and scientific studies brings us all to the point of an obligation that we must find ways to solve these problems.

Some popular agricultural foods need more water than others. How do we deal with the ethical dilemmas of producing food, saving water, and making money by doing it? There is a common ground.

Quite a few opportunities can come from implementing water-saving agricultural techniques that can feed the world by discovering techniques like Desalinization which is spreading throughout the world and benefiting the folks in the regions that need it the most.

Investment in Water Infrastructure

Water deals are poised to pick up, according to the chief executive of one of the biggest publicly traded water investors, thanks to regulatory changes and critical infrastructure needs that weigh on municipal finances.

Water is a fragmented market. Some 85% of water is controlled by municipalities scattered across America—but that is slowly changing, according to the CEO of water and wastewater utility Aqua America (ticker: WTR), Chris Franklin.

According to the American Water Works association It’s not just legislation: Many local governments are already under financial pressure, with looming pension payments and not enough money to meet them. The U.S. will need to spend $1 trillion over the next 25 years to meet water-related demands, according to the American Water Works Association.

Over the many year after World War II not very much infrastructure has been dealt with at least the way it has be supposed to be dealt with.

This give private corporation a chance to sneak in a bid on run down Water & Sewer Companies that have been run for many years eventually run down. Recently the S&P Global Water Index, which includes 50 water-linked companies worldwide, had climbed 17% in 2019. 

Many of its components had turned in positive numbers. For example, utility American Water Works (ticker: AWK) was up 36%; water-technology provider Xylem (XYL), 12%; and conglomerate Danaher (DHR), 33%. The Invesco Water Resources ETF (PHO) had gained 25% in the same stretch.

How To Invest In Water Stocks

Investing in water stocks can be a smart move for those looking to capitalize on the increasing global demand for clean water. Water is an essential resource, and its scarcity in many parts of the world is driving up the value of companies that provide water-related services.

To invest in water stocks, it’s important to understand the different sectors within the water industry, including water utilities, infrastructure, technology, and purification companies. Conduct thorough research on these companies, focusing on their financial health, growth potential, and their role in the water supply chain.

Additionally, consider the broader market trends, such as environmental regulations and climate change impacts, which can influence the water industry. Diversifying your investment across various sectors within the water market can also help mitigate risks. Here’s a list of steps to get started with investing in water stocks:

Steps to Invest in Water Stocks

  1. Research the Water Industry: Understand the different sectors (utilities, infrastructure, technology, purification) and identify the key players.
  2. Analyze Financial Health: Look into the financial statements, profitability, and growth projections of the companies you’re interested in.
  3. Consider Market Trends: Pay attention to environmental regulations, climate change, and global water scarcity issues that could impact the industry.
  4. Diversify Your Portfolio: Spread your investments across various sectors within the water industry to reduce risk.
  5. Invest in ETFs and Mutual Funds: Consider water-focused exchange-traded funds (ETFs) and mutual funds for diversified exposure.
  6. Monitor Investments: Regularly review the performance of your water stocks and stay informed about industry developments.
  7. Consult a Financial Advisor: Seek advice from a financial professional to tailor your investment strategy to your financial goals and risk tolerance.

By following these steps, you can make informed decisions and potentially benefit from the growing demand for clean and accessible water.

Types of Water Stocks

Investing in water stocks involves understanding the various segments within the water industry, each with its unique dynamics and opportunities. Here’s a breakdown of the different types of water stocks:

  1. Water Utilities: These companies are involved in the delivery of water and wastewater services to residential, commercial, and industrial customers. They typically operate in regulated markets, providing a stable and predictable income stream. Examples include American Water Works (AWK) and Aqua America (WTRG).
  2. Water Infrastructure: Firms in this category design, build, and maintain the infrastructure needed for water delivery and treatment, such as pipelines, pumps, and storage facilities. They benefit from the ongoing need to upgrade aging infrastructure. Companies like Xylem Inc. (XYL) and Mueller Water Products (MWA) are key players.
  3. Water Technology and Equipment: This sector encompasses companies that develop and manufacture technologies and equipment for water treatment, purification, and management. These innovations are crucial for ensuring water quality and efficient usage. Notable companies include Danaher Corporation (DHR) and Pentair plc (PNR).
  4. Water Resource Management: These companies focus on the sustainable management and conservation of water resources. They often provide services like water efficiency solutions and consultancy on water usage. Companies like Veolia Environnement S.A. (VEOEY) and IDEX Corporation (IEX) are examples.
  5. Desalination: Firms specializing in desalination convert seawater into potable water, addressing water scarcity in arid regions. This sector is growing as technology improves and the need for freshwater increases. Leading companies include IDE Technologies and General Electric (GE) through its water technology division.
  6. Bottled Water and Beverage Companies: While not purely water stocks, companies that produce bottled water and other beverages also capitalize on the demand for clean drinking water. Examples are Nestlé (NSRGY) and The Coca-Cola Company (KO).

By understanding these categories, investors can make more informed decisions and strategically diversify their portfolios within the water sector.

Conclusion:

Investing in water stocks offers a unique opportunity to capitalize on the essential and ever-growing demand for clean water. With sectors ranging from utilities and infrastructure to technology and resource management, there are diverse options for building a robust investment portfolio.

By conducting thorough research, considering market trends, and diversifying investments, you can mitigate risks and potentially benefit from the increasing global focus on water sustainability. As with any investment, staying informed and consulting with financial advisors will help you make sound decisions. Water stocks not only provide financial opportunities but also contribute to addressing one of the most critical challenges of our time—ensuring a sustainable and secure water supply for the future.

Who Are the Global Water Grabbers

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

JimGalloway Author/Editor                                                                                                                                                                                                                                                                                                                                                                                  

References: The Street-How To Invest in Water Commodity

FAQ’s

1. Why should I invest in water stocks?

Investing in water stocks can be a sound decision due to the essential nature of water. As the global population grows and water scarcity becomes more pronounced, the demand for water-related services and technologies is expected to increase, providing growth opportunities for companies in this sector.

2. What are the main types of water stocks?

Water stocks can be categorized into several types, including water utilities, water infrastructure, water technology and equipment, water resource management, desalination companies, and bottled water and beverage companies.

3. Are water stocks a safe investment?

While no investment is entirely risk-free, water stocks are often considered relatively stable, especially water utilities, due to their essential service nature and regulated market environment. However, it’s important to conduct thorough research and diversify your portfolio to mitigate risks.

4. How do I choose which water stocks to invest in?

Start by researching the different sectors within the water industry. Look at the financial health, growth potential, and market position of companies. Consider broader market trends, such as environmental regulations and technological advancements. Diversifying your investments across multiple sectors can also help manage risk.

5. What are some popular water stocks?

Popular water stocks include American Water Works (AWK) and Aqua America (WTRG) for utilities, Xylem Inc. (XYL) and Mueller Water Products (MWA) for infrastructure, Danaher Corporation (DHR) and Pentair plc (PNR) for technology and equipment, Veolia Environnement S.A. (VEOEY) for resource management, and Nestlé (NSRGY) and The Coca-Cola Company (KO) for bottled water and beverages.

6. Can I invest in water through ETFs or mutual funds?

Yes, investing in water-focused exchange-traded funds (ETFs) or mutual funds is a convenient way to gain diversified exposure to the water industry. Examples include Invesco Water Resources ETF (PHO) and the First Trust Water ETF (FIW).

7. What factors influence the performance of water stocks?

Several factors can influence water stocks, including environmental regulations, technological advancements, infrastructure investments, population growth, climate change, and water scarcity. Staying informed about these trends can help you make better investment decisions.

Recent Posts