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VIDEOInvesting in Water Stocks: Potential Plays in Japan, China, and US
By
Fil Zucchi
May 26, 2010 1:10 pm
Japan's Kurita Water Products is a pure play on water infrastructure while China's Duoyuan Global Water trades on the NYSE and is extremely volatile.
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As is true with many big-picture investments, timing them is always the trickiest part. Since 2005, water plays have been mixed. Many of the names I dug up for my first piece on water (see Playing With Water) have been bought out, some for very fat premiums. Others have had ups and downs and have gone nowhere fast. It goes without saying I've been involved mostly in the latter. But with the shelling many markets have taken of late, it may be worthwhile recapping some of the names out there, which eventually may come into their own.
My favorite from a "what they do" standpoint remains Japan's Kurita Water Products, a pure play on water infrastructure. Similar names are Organo Corp., which I bought in the last few months, and Ebara Corp, which I missed several times but is now coming back into buying range. If you're wondering why I’m looking in Japan, the obvious answer is that it’s close to China. And speaking of China, Duoyuan Global Water (DGW) trades on the NYSE and is volatile enough to make you sick.
Nearer to home, Itron (ITRI) is fast becoming the go-to name for next-generation metering of water, electricity, and any other kinds of utilities. That's my name to play the "in-vogue" smart grid theme, but with just as much a water flavor to it. It's been hurt badly -- fortunately -- giving me a chance to get back into it after some pesky options called it away from me a few months ago. A very similar company is Badger Meter (BMI).
A large cap name that I just bought this morning, and that I believe has been a long time fave of Ryan Krueger, is French public utility Veolia Environmental (VE). Europe isn't my favorite market to say the least, but for the right price I could be convinced. Pull up a three-year chart of Veolia and its basic financials and you'll see what I mean. Besides, Veolia has its paw pretty much all over the world.There are a slew of other smallish companies involved in “water” niches -- Calgon Carbon (CCC), Cadiz (CDZI), and Idex (IEX) for example -- but none have really caught the short attention I’ve given them so far.
For the ETF types, many have popped over the last few years, including the Powershares Water Resources (PHO) and the Claymore S&P Global Water Index ETF (CGW).
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Positions in Kurita Water Products, Organo Corp, DGW, ITRI, and VE.
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