Water Stocks?

Discussion in 'Stock Market Education' started by Rainman, Dec 16, 2015.

  1. Rainman

    Rainman Senior Investor

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    Everyone uses water and water companies will for that reason always be making money.

    Question: would investing in water utility stocks be profitable in the long term?
     
  2. Corzhens

    Corzhens Senior Investor

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    Water is a precious commodity particularly now that we have a drought here in the Philippines. However, from what I know, water supply here is controlled by the government and the concessionaires are only distributors but not really owners of water. I am not sure if those distributors would be a good investment in terms of shares of stocks because they are under government regulations so their profit is somehow controlled.
     
  3. crimsonghost747

    crimsonghost747 Senior Investor

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    Short answer: yes.

    Long answer: yes but there are things to consider. Water utilities, like most utilities, are a regulated business. They are also pretty much a monopoly, not overall but you only have one set of pipes in a single area and the owner of those pipes has monopoly on that area. So it's a regulated monopoly... as far as I know this is the situation with every water utility. That means that you will get income, pretty much guaranteed income, but it's also limited by the regulations in place. So it's a low risk, low profit investment in most cases.
     
  4. Lynk

    Lynk Member

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    Where would someone find out about what water stocks are available? Do you think it's better to invest in a company that handles water for established city or look for emerging markets where they are currently working on improving the infrastructure? It seems like it would be a safe investment long term. Honestly I never even considered utility investments!
     
  5. crimsonghost747

    crimsonghost747 Senior Investor

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    Google is good. Just go with "list of water utility stocks" or something.
    I personally invest in WTR but there are a lot of other good ones out there, a lot of people seem to also like AWR and AWK.

    Just keep in mind that currently the prices on these are pretty high so I wouldn't necessarily be making big bets right now.
     
  6. anders

    anders Well-Known Member

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    It depends on specifics. Where I live, England, water isn't in short supply, so whether investment in water companies will be profitable will depend on peripheral factors, which might make it harder to forecast.

    I'm actually currently weighing up an investment in a couple of tech firms that are working out of Israel and focusing on small scale desalination. Israel has a massive water problem, which I've been told is about to get a lot worse in the coming years. This might be something worth investigating in you're looking at water stocks.
     
  7. crimsonghost747

    crimsonghost747 Senior Investor

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    Even if water isn't in short supply, I take it that you together with most brits still want it coming out of the tap, shower etc instead of running to the closest river with a bucket? :D And that is why I enjoy the pipeline companies. :)
     
  8. anders

    anders Well-Known Member

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    Yes, you're absolutely right! But that's the point - the pipeline infrastructure doesn't really offer a growth opportunity to the investor, so it isn't a reason to make me want to put my money into their companies.
     
  9. crimsonghost747

    crimsonghost747 Senior Investor

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    Well you are right there, the opportunity for growth mainly comes from M&A so it's certainly a slow and steady road. But they are safe, predictable and maybe most importantly: always profitable.
     
  10. moneyman

    moneyman Well-Known Member

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    I think it would be profitable in longer run. It would at least always keep its value. In addition water is needed for living and there is always shortage of clean water somewhere in the Earth.
     

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