Saturday, August 06, 2011

Clean Water Stocks

I am currently reading the book Guide to Investing in the Apocalypse by James Altucher and Douglas R. Sease. The book has an entire chapter on the emerging fresh water crisis. The book describes how 40% of the world's population will be without adequate clean water within nine years, according to estimates made by the United Nations. The authors provide several stock ideas in this industry which would be a play on dwindling supplies of fresh water, many of which pay a decent dividend, such as the desalination company Consolidated Water Co. Ltd. (CWCO), currently sporting a yield of 3.6%.

Desalination, also known as desalinization and desalinisation, could be one of the leading industries in the next decade, along with the water purification business. Siemens (SI) and General Electric (GE) have water desalination divisions that make up a small part of their businesses, and according to the list of water purification and desalination stocks at, there are over twenty companies involved in the treatment of water, and a dozen with yields ranging from 1% to over 4%.

Consolidated Water Co. Ltd (CWCO) is one of the purest plays in the sector. It operates seawater desalination plants and other water services in the Cayman Islands, the Bahamas, Belize, the British Virgin Islands, and Bermuda, using reverse osmosis technology to convert seawater to drinkable water. The stock trades at 15 times forward earnings. The company has raised its dividend in eight of the last ten years.

Another company on the list that is also covered in Altucher's book is Flowserve (FLS), a manufacturer of heavy duty pumps and provider of water treatment services. The stock has a forward price to earnings ratio of 9.3 and pays a yield of 1.4%.

One other appearing on both sources is Mueller Water Products, Inc. (MWA), trading at 12.8 times forward earnings and providing investors with a yield of 3.2%. The company is in the business of water infrastructure and flow control products.

To access a free list of all the stocks involved in desalination and purification, which can be downloaded, sorted, and updated, go to

Disclosure: Author did not own any of the above at the time the article was written.


No comments: