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It appeals to me when a business operates in multiple countries. It appeals to me when a company innovates a way to make waste (cheap in any market) valuable. It appeals to me when a company has contracts with guaranteed rate increases from national governments. It appeals to me when a company trades at one third the average valation for its industry. Dividends appeal to me.

From the Cascal (HOO) prospectus from their 2008 IPO:

We provide water and wastewater services to our customers in eight countries: the United Kingdom, South Africa, Indonesia, China, Chile, Panama, Mexico and The Philippines. In a typical wastewater project, we collect the wastewater from our customers’ premises, treat the wastewater to meet the required standards and return the treated water to the environment. We provide these services under long-term contracts or licenses that typically give us the exclusive right to provide our services within a defined territory. Our customers are predominantly homes and businesses representing a total population of approximately three million.

I am a big believer in water utilities and don't doubt that investors (those who haven't yet) will realize that, in order for us to exist, so too do these companies. Drinking water is everyone's most precious resource and many governments, currently managing domestic water distribution and treatment, are expected to turn to the technology and efficiency of the private sector. You can't print water!

Veolia Environment (NYSE:VE), the growing global giant of this industry, trades at a P/E of 22+ and is down 70%+ from highs a year ago. HOO trades at a P/E of just over 4 and is down over 80% from its IPO a year ago. Furthermore, Cascal has reported much of FY2009 and, while revenues are not above 2008 levels, profit margins have been maintained and criteria for several future rate increases have been met.

This stock is traded on somewhat low volume and doesn't make Wall Street headlines. The company, however, has received awards and accolades from governments all over the world, while getting paid to sustain human life. These, along with an annual dividend and a valuation more in line with the coal industry, are what I call strong fundamentals.

Disclosure: Long HOO, VE, SBS, CWCO

Source: Cascal: Knock Knock, HOO's There?