- It's not surprising Q3 guidance in the water and renewable-energy sector was relatively subdued given mixed economic data and continuation of delayed orders for big projects, says Wedbush, however ...
- Only Tetra Tach ((TTEK) showed ill-effect from the sequestration and instead there are encouraging signs out of municipalities.
- Xylem (XYL) and Watts Water (WTS) said Europe had been worse than expected, but saw recent stabilization. While several noted weakness in China, A.O. Smith (AOS) bucked the trend with a 30% increase in sales there.
- Wedbush's favorites are low-risk, high performers like Pentair (PTR), Franklin Electric (FELE), and Valmont Industries (VMI). Valmont is a controversial name, but the team fells concerns over slowing irrigation business are baked into the stock and the valuation - particularly given the balance sheet and ROIC - is compelling.
- Names to avoid are Nuverra Environmental (NES), Aegion (AEGN), and Energy Recovery (ERII) given disappointing quarters for the first two and an extremely overvalued ERII.
- ETFs of note: FIW, CGW, PHO, PIO.
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