What makes water stocks a good investment opportunity?

Water stocks are considered valuable investments because they're tied to an essential resource with increasing scarcity. As global populations grow and climate change affects water supplies, companies that manage, treat, and distribute water face rising demand. These stocks often combine stability (everyone needs water) with growth potential from infrastructure upgrades and new technologies, potentially offering both defensive characteristics during market downturns and long-term appreciation.

What is desalination and why is it important for water stocks?

Desalination is the process of removing salt from seawater to create freshwater. It's becoming increasingly important as traditional freshwater sources face pressure from population growth and climate change. Companies specializing in desalination technology (like ERII and CWCO in this portfolio) are positioned to benefit as more regions turn to oceans for drinking water. While historically expensive, new technologies are making the process more energy-efficient and cost-effective.

What's the difference between regulated and non-regulated water companies?

Regulated water companies (like AWK and WTRG) operate as utilities with government oversight on their rates and returns. They typically offer more stable, predictable earnings and dividends but slower growth. Non-regulated water companies focus on technology, equipment, or services without direct rate regulation. These firms (like XYL and PNR) often have higher growth potential but may experience more volatility. A diversified water portfolio typically includes both types for balance.

How does climate change impact water investments?

Climate change creates both risks and opportunities for water investments. Increasing droughts, flooding, and weather volatility strain existing water systems, requiring more infrastructure spending. This benefits companies providing solutions for water conservation, flood management, and system resilience. Climate-driven water scarcity also increases the value of water rights and makes efficient technologies more essential. Companies in this portfolio are positioned to address these challenges through infrastructure improvements, advanced treatment technologies, and resource management.

15 handpicked stocks

Water Wars Portfolio

Dive into companies transforming how we access, purify, and manage Earth's most precious resource. These carefully selected stocks represent leaders revolutionizing water technology and infrastructure as global demand surges.

Han Tan | Market Analyst

Updated 2 days ago | Published at juin 17