Investing in Water Sustainability: 3 Stocks Making Waves
Water sustainability is a crucial issue for all of those inhabiting this planet. Around 4 billion people live in countries experiencing high water stress. This could worsen as droughts and other extreme weather environments become more aggravated as a result of climate change. Therefore, investing in water stocks is not only a moral duty, but also a smart financial decision.
Water infrastructure stocks are companies that provide solutions for water management, treatment, distribution and conservation. These stocks can benefit from the growing demand for water services, as well as the regulatory and social incentives for water efficiency and quality. Here are water stocks that investors should buy for water sustainability.
Xylem (XYL)
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Xylem (NYSE:XYL) is a global leader in water technology, offering engineering products and services for water and wastewater applications. Xylem’s solutions include pumps, valves, meters, sensors, software and analytics that help customers optimize water use, reduce energy consumption and improve water quality.
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Xylem also supports water sustainability globally as the company offers its products in China, India, Eastern Europe, Latin America and Africa. In their third quarter earnings print, Xylem reported $2.1 billion in revenue, up more than 50% year-over-year (YOY). This was driven by strong demand for the company’s water technology globally. Xylem also raised full-year revenue guidance to $7.3 billion, which would represent a 32% YOY increase.
While shares have stagnated in 2023, Xylem offers a 33 cent quarterly dividend, representing a 1.25% annualized yield.
Ecolab (ECL)
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Ecolab (NYSE:ECL) is a global provider of water, hygiene and infection prevention solutions for various industries. ECL’s solutions help customers save water, energy and costs, while attempting to enhance their environmental performance and reputation.
The company’s solutions have certainly picked up in demand in recent years. In 2022, revenue growth reached double digit territory. In particular, Ecolab’s global industrial business segment, which includes hygiene solutions for water and food & beverage products, grew 14% YOY while the water operating segment in particular increased sales by 13% due strong pricing and new business wins. Solid growth in the company’s water operating segment has continued into 2023. Third quarter 2023 results saw the global industrial business segment offsetting declines in other segments.
Global Water Resources (GWRS)
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Global Water Resources (NASDAQ:GWRS) is a water resource management company that owns and operates regulated water, wastewater and recycled water utilities in Arizona. The company leverages a proprietary Total Water Management approach, which integrates water conservation, reuse and smart technology to deliver reliable and efficient water services to its customers. GWRS operates 29 systems that Service primarily the metropolitan Phoenix and Tuscon regions of Arizona. Moreover, the company recycles about 1 billion gallons of water annually.
From a financial perspective, the company still has a lot of growing to do as it only has generated about $52 million in revenue over the last twelve months. However, Global Water is operating in a burgeoning metropolitan area, which could incite improved growth in the following quarters.
On the date of publication, Tyrik Torres 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.
Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.
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