Investors should take a few minutes to consider investing in water stocks.
Most of us take water for granted. We think nothing of turning on the sprinkler to water the grass, filling the cooler with ice or running the dishwasher. But investors understand that H2O is a scarce resource. It's big business and investing in water is a long-term opportunity. In fact, many fund managers refer to water, which humans need to survive and businesses to thrive, as the new oil.
Today, water is a $483 billion global industry (measured by revenue) that is facing intense challenges.
"You turn on your tap and expect water. But when it doesn't work, all of a sudden there's all this attention on it," says Leslie Samuelrich, president of Green Century Funds. Lake Mead, the country's largest reservoir, is near record lows, facing persistent drought conditions. This winter, a train derailment in Ohio made news when it contaminated drinking water. The U.N. held a water conference in March that was a call to action to tackle global issues.
And yet, water is as important to the manufacturing and service sectors as other supply-chain links are. Semiconductor makers need pure water to make chips. H2O is needed to cool data centers. Restaurants and hospitals can't operate without clean water. Water, or a lack of it, is an operational risk, just like the possibility of a cyberattack.
"Water is a mission-critical asset needed for companies to grow," says Lori Keith, a portfolio manager at Parnassus Investments.
Water investing is a megatrend
No wonder investors are gulping up water stocks. A prime example is leading water-tech stock Xylem (XYL), a member of the Kiplinger ESG 20, the list of our favorite stocks with an environmental, social or corporate governance focus. Wall Street sees other opportunities ranging from makers of smart sensors that detect leaky pipes to water-treatment solutions that remove harmful contaminants to precision farm irrigation systems that minimize water usage.
"Water is a megatrend," says Janet Glazer, manager of the Fidelity Water Sustainability Fund.
Below, we've provided some suggestions for the best water stocks to buy, most of which land in the midsize camp by market value, that offer an array of solutions to water-specific problems. Prices, investment returns and other data are through April 30, unless otherwise noted.
Water, a seemingly ubiquitous resource, is gaining increasing attention from investors who recognize its critical role in sustaining life and supporting various industries. As someone deeply immersed in the world of water investments, I can attest to the compelling evidence that positions water as a valuable and scarce commodity, akin to the significance of oil in the past.
The article rightly highlights the global water industry's substantial size, with a staggering $483 billion in revenue. This figure not only reflects the sheer scale of the water sector but also underscores its economic importance. Beyond mere statistics, recent events such as the precarious state of Lake Mead and a train derailment contaminating drinking water in Ohio underscore the pressing challenges facing the water industry. These real-world incidents demonstrate the vulnerability of water resources and the urgent need for sustainable solutions.
The analogy of water as the "new oil" is not just a catchy phrase but a well-founded comparison. Like oil, water is essential for human survival, and its scarcity poses a significant risk to both individuals and businesses. The U.N.'s water conference in March serves as a testament to the global recognition of water-related issues and the call to address them collectively.
Intriguingly, the article delves into the critical role of water in various sectors, highlighting its indispensable nature in manufacturing, technology, and healthcare. The operational risk associated with water shortage is likened to the threat of cyberattacks, emphasizing its mission-critical status for companies striving to grow and thrive.
The assertion that water investing is a megatrend is not without merit. The example of Xylem, a leading water-tech stock, and its inclusion in the Kiplinger ESG 20 underscores the growing interest and potential profitability in environmentally conscious investments. The mention of smart sensors, water-treatment solutions, and precision farm irrigation systems further emphasizes the diverse opportunities within the water sector.
For investors seeking to capitalize on this megatrend, the article provides valuable insights into some of the best water stocks to consider. These companies, often falling within the midsize market value range, offer a range of solutions to address specific water-related challenges. As of the latest data through April 30, the article equips potential investors with information on prices and investment returns.
In conclusion, water investment is not merely a financial opportunity; it is a strategic move aligned with the current global landscape. The evidence presented in the article underscores the urgency and potential for long-term gains in investing in water stocks, making it a compelling choice for those with foresight and a commitment to sustainability.
