Water Stocks: Investing in Water

Hip Hop Pool Party with LL COOL J

Water can be found at a Hip Hop Pool Party.  Super. How about investing in water?

When it comes to investing in water then you must have U.S. companies Flowserve (FLS) and Pentair (PNR) in your arsenal.  However the best bet for investing in water and solving all it's unique challenges and the companies that make up the trade world wide check out the 'Water ETF' -- PowerShares Water Resources Portfolio (PHO).


You can already think of why investing in the water business is worthwhile now that it's 2013.  How much do you pay for bottled water? Notice how expensive it is at a hotel?  Ever notice the cost of water at the airport or outside the U.S.?  It's pricey.  We all know about how the global food demand is going to make water a commodity etc, etc.  You don't need to hear from our crappy website about how valuable water will become in the future.  The U.S. water infrastructure is in dire need of an overhaul and major coin is going to be spent on fixing in it the coming years.

Food Water for Thought:

Marianne Lavelle and Thomas K. Grose For National Geographic News Published January 30, 2013

The amount of fresh water consumed for world energy production is on track to double within the next 25 years, the International Energy Agency (IEA) projects.

And even though fracking—high-pressure hydraulic fracturing of underground rock formations for natural gas and oil—might grab headlines, IEA sees its future impact as relatively small.

By far the largest strain on future water resources from the energy system, according to IEA's forecast, would be due to two lesser noted, but profound trends in the energy world: soaring coal-fired electricity, and the ramping up of biofuel production.

If today's policies remain in place, the IEA calculates that water consumed for energy production would increase from 66 billion cubic meters (bcm) today to 135 bcm annually by 2035.

That's an amount equal to the residential water use of every person in the United States over three years, or 90 days' discharge of the Mississippi River. It would be four times the volume of the largest U.S. reservoir, Hoover Dam's Lake Mead (source:Nationalgeographic.com).

There are several 'water' ETFs you can pick from, a quick Google Search will lead you to the usual websites that have the securities mentioned.  Of all the water ETFs available for Joe Public investor the PowerShares Water Resources Portfolio (PHO) has outperformed them all in the past 12 months.  The PHO is up 22% in the past year and YTD it's up 10%.  The PowerShares Water Resources Portfolio (PHO) is also the largest water ETF with nearly $925 million in assets.  Only 3.6% of PHO's lineup is devoted to large-caps with small-caps accounting for the major mix.  We also like that at least 90% of its total assets in common stocks and American depositary receipts (ADRs). To review what the PHO consists of click here to check out Inveso Power Shares website.

Again your weapons of choice for investing in water are the following:

PowerShares Water Resources (PHO) is trading at $ 22.97 and its shares are now -1.31% below its 52-week high.

Flowserve Corp (FLS) shares are at $165.42 and its shares are now 2% below its 52-week high.  FLS has a P/E Ratio of 19.7 and EPS of 8.43.

Pentair Ltd (PNR) shares have a P/E Ratio of 160.3 and EPS of 0.32, dang.  However Pentair (PNR) is trading at $ 51.65 which is 5% from its 52-week high.