What makes water stocks a good investment?

Water stocks can be attractive investments because they're based on an essential resource with growing demand and limited supply. Many water utilities operate as regulated monopolies with predictable revenue streams, providing stability during economic downturns. Additionally, the urgent need to upgrade aging water infrastructure worldwide is creating substantial growth opportunities for companies in this sector.

What are regulated water utilities?

Regulated water utilities are companies that provide water and wastewater services under government oversight. Their rates and returns are set by public utility commissions, which typically allow them to earn a fair return on infrastructure investments. This regulation generally results in stable, predictable revenue and dividend growth, making these companies potentially less volatile than many other investments.

How does climate change affect water investments?

Climate change is intensifying water scarcity in many regions through droughts, changing precipitation patterns, and rising temperatures. This creates growing demand for companies that provide water conservation, purification, and management solutions. As governments and industries invest more in water security, companies in this portfolio may benefit from increased spending on infrastructure, technology, and services that address these challenges.

What is desalination and why is it important?

Desalination is the process of removing salt from seawater to make it usable for drinking or irrigation. As freshwater becomes scarcer in many regions, desalination technology is becoming increasingly important as a sustainable water source. Companies that develop efficient desalination systems or components, like Energy Recovery (ERII) in this portfolio, may see growing demand as more coastal regions turn to ocean water to meet their needs.

What does "market cap" mean in the stock cards?

Market capitalization (or "market cap") represents the total value of a company's outstanding shares. It's calculated by multiplying the current share price by the total number of shares. Market cap helps you understand a company's size: large-cap companies (typically over $10 billion) may offer more stability, while small-cap companies might present more growth potential but with higher risk. This metric gives you context about each water company's relative size in the market.

15 handpicked stocks

Blue Gold Portfolio

Invest in the world's most essential resource with this carefully curated collection of water-focused companies. Our professional analysts have selected industry leaders managing, purifying, and conserving our planet's most vital commodity.

Han Tan | Market Analyst

Updated 2 days ago | Published at juin 17