As a fundamental necessities of life, water is one of the most valuable resources in the world. So, is it a commodity worth betting on?
With the world continuously experiencing the effects of climate change, a growing awareness of water scarcity has never been more evident. Fortunately, some companies concentrate on supplying, recycling, and treating water for different uses. Investors would refer to these companies as water utility stocks, and many water stocks to buy are available in the market.
No matter the state of the economy, the demand for water will not cease. And due to this nature, these companies offer revenue reliability, making them one of the go-to sectors for long-term investors. In addition, water utility stocks have a high potential to provide reliable dividends due to their consistent revenue streams. Thus, let’s dive into three water stocks to buy for long-term investors.
Global Water Resources, Inc. (GWRS)
Global Water Resources, Inc. (NASDAQ:GWRS) is a water resource management company in Phoenix and Tucson, Arizona.
First, it operates, owns, and manages water, recycled water, and wastewater facilities that deploy a total water management program. This approach focuses on treating water to a potable standard as well as cleaning, treating, and recycling water for various uses. Recycling over a billion gallons of water annually, GWRS is recognized as a leading water resource management company.
Also, Global Water Resources, Inc. closed its third quarter with solid results. The company reported a revenue increase of 22.2% and a net income increase of 56.2%. Additionally, it has a considerable expansion based on the surge of its active connections of 8.7%.
Early this year, GWRS completed the acquisition of Farmers Water Co. That added approximately 3,300 active water service connections and 21.5 square miles of “Certificate of Convenience and Necessity” service area in the Town of Sahuarita. The continued investments and growth plans make GWRS one of the most promising water stocks to buy.
Consolidated Water Co. Ltd. (CWCO)
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Cayman Islands-based Consolidated Water Co. Ltd. (NASDAQ:CWCO) is a water supply treatment and distribution systems specialist providing potable water to the Bahamas and Grand Cayman government utilities. Also, it conducts retail operations as a water utility in the Grand Cayman Islands and Seven Mile Beach.
Further, CWCO offers engineering, management, operating, and design services for water products, wastewater treatment, and supply & treatment services. Recently, the company acquired a 100% interest in Ramey Environmental Compliance. Plus, it was awarded the contract to construct a new Hawaii desalination plant.
CWCO reported a solid 99% total revenue increase, attributed to its expansions in services, retail, and manufacturing segments. Its service revenue surged to an impressive 237% due to significant progress on projects like Arizona’s water treatment plant. This impressive third-quarter result led to EPS beating analyst estimates by 41.03%.
Finally, the company is strategically moving into newer markets, including a U.S. desalination sector. And, strategic acquisitions are in the works to boost growth and expansion, like its earlier adoption of PERC Water Corporation. With solid management and growth initiatives, CWCO can be one of the worthy water stocks to buy.
American States Water Company (AWR)
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American States Water Company (NYSE:AWR) is a holding company operating three main water and electric utility operations segments. These are done under three business units operating as contracted and regulated utility services. Its business operations consist of purchasing, distributing, producing, and selling water to 10 California counties.
Also, it distributes electricity in San Bernardino County Mountain communities. Further, the company constructs and maintains wastewater systems at various U.S. military bases. Previously, American States Water Company announced its privatization contract award with Naval Air Station Patuxent River in Maryland. This contract goes for $349 million over 50 years.
Recently, AWR reported a strong quarter, with its EPS growing by 23.2% year over year (YOY), beating estimates by 3.66%. And, EPS growth resulted from a favorable adjustment because of a refund in the cost of capital and revenues reported in Q2 of 2022.
Also, American States Water Company filed a water utility general rate for 2025 and 2027 that outlines its infrastructure investment plan of $611.40 million over the cycle. The company has a solid dividend history with a consecutive increase of 69 years, ranking it as a Dividend King. This shows commitment to long-term profitability to its shareholders, making it a top water stock to buy.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Rick Orford is a Wall Street Journal best-selling author, investor, influencer, and mentor. His work has appeared in the most authoritative publications, including Good Morning America, Washington Post, Yahoo Finance, MSN, Business Insider, NBC, FOX, CBS, and ABC News.
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