6 Water Investment Opportunities

by: Tony Daltorio

Global water usage at its current rate is unsustainable...and despite its fundamental importance to life, water is often taken for granted. It is also an issue and a sector often overlooked by investors.

In the United States alone, the water industry is a $120 billion market that is expected to grow at 6%-7% per year over the next several years. On a global basis, the industry size exceeds $400 billion annually. The industry is expanding even more rapidly globally than in the United States due to the rapidly growing needs of the emerging markets.

Water quality issues are becoming every bit as important as water quantity issues. The fact is that population and industrial growth are adding new sources of pollution and increased demand for clean water across the globe.

What is often obscured is that, even with stepped-up efforts in global water treatment efforts, vast amounts of potentially valuable wastewater will continue to be produced for the foreseeable future. In fact, it is estimated that 1,500 cubic kilometers of wastewater is produced on an annual basis.

There is potential value in this wastewater. Treatment technologies for removing the harmful components from wastewater have become increasingly effective. These technologies may actually allow wastewater to become a potential source of valuable raw materials including water and energy that can be reused productively for energy and irrigation.

So the water treatment sector is definitely one investment sector poised for future growth.....

Some of the larger companies poised to benefit most from wastewater treatment include:

  • ITT Corporation (NYSE: ITT) – The company's equipment monitors and regulates the flow of water.

  • Danaher Corporation (NYSE: DHR) – The company makes water treatment products necessitated by recycling and re-use of industrial water.

  • Nalco Holding Company (NYSE: NLC) – The largest global player in the industrial water treatment industry.

  • Veolia Environnement ADR (NYSE: VE) – The global leader in water services benefits from public-private partnerships.

  • Suez Environnement ADR [PINK: SZEVY.PK] – Number two globally in water services behind only Veolia.

Information on these five companies can easily be found at any investment site. Investors are urged to do their due diligence before investing into any of these companies.

More aggressive investors may want to take a look at a smallcap company whose price has beaten up lately with the downdraft in the market. It is called General Environmental Management [OTCBB: GEVI].

General Environmental recently moved into the wastewater treatment business by acquiring Southern California Waste Water which was established by six of the major oil companies in 1959. The company provides service to the oil and gas industry and industrial waste clients in California.

Southern California Waste Water is recognized as one of the top waste water utilities in the United States. The company has treated well over two billion gallons of wastewater and has done so profitably – it enjoys profit margins in excess of 30%.

Regardless of how one goes about doing it, investing in the water sector should prove to be quite profitable. Again, investors are urged to do their due diligence before investing.

Disclosure: No positions