Five years ago Jeff Saut suggested that the next war will be fought over water, not oil. As the ongoing contamination of the ocean in the Gulf of Mexico proves, water is a valuable and fragile resource. From an investors point of view, water is a solid growth area with high barriers of entry.
Itron (ITRI) is fast becoming a leader in next-generation smart grid metering of water, electricity, and any other kinds of utilities. A very similar company is Badger Meter (BMI). A large cap name worthy of attention in Europe is French public utility Veolia Environmental (VE). This is a well priced international company.
Calgon Carbon (NYSE: CCC) is a maker of water and air purifying systems, it has two main lines of growth: activated carbon and ultra violet light equipment, which are used to treat water. Both of these business lines are supported by government regulation, specifically mandates from the Environmental Protection Agency.
Calgon’s growth should continue through 2010 and 2011. They will have significant pricing power, they are not really depending on economic growth or funding and the valuations are still relatively low. The stock has traded between $10.93 and $18.35 during the past year.
On June 2, 2010, Calgon Carbon Corp., announced a contract from the U.S. Army for air filtration machinery valued at least $1.9 million. The contract, is worth up to $5.1 million over three years, and covers general-purpose air filtration machinery. Calgon shares rose 33 cents, or 2.3 percent, to $14.43 during afternoon trading.
Water related ETFs worth looking at include the Powershares Water Resources (PHO) and the Claymore S&P Global Water Index ETF (CGW).
Although water should prove to be a great investment, as with many big-picture investments, timing them is always the hardest part. Averting a war over water is a matter of stewardship, efficiency and forward looking companies that provide technologies to manage the coming water crisis.
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