By Robert Ross
This might surprise you, but water is a fantastic investment.
Take water utility stocks like American Water Works (AWK) and Consolidated Water Co. (CWCO), for example. In the past six months alone, their stocks have shot up 19% and 28%, respectively.
Industrial water companies like Danaher Corp. (DHR) are also on a great run. Danaher has climbed 10% in the last six months:
That’s pretty substantial, especially compared to the S&P 500’s 3% gain during this stretch.
Water Stocks Offer a Safe Haven
Stock market volatility is part of the reason water stocks are doing so well right now.
You probably know that US stocks have had a rollercoaster year. In August alone, there were five days when the S&P 500 rose or fell 1%. (This only happened on eight days during all of 2018.)
Add in trade wars, the impeachment circus, a yield curve inversion… and you get a lot of nervous investors.
At the same time, stocks are flirting with all-time highs. And we’re at the tail end of the longest bull market in US history. So investors are rightfully skittish.
When stock market risk rises, investors flock to safe and reliable stocks. And water stocks fit that bill.
Water utilities are my favorite type of water stock. These companies process and deliver water to cities and towns. They’re often highly regulated, which limits profits. But it also keeps out competition.
Water infrastructure and equipment companies are another good option. These companies work with water utilities and the industrial and commercial sectors to improve water treatment and transport options.
Either way, you want some exposure to the water industry right now…
People Always Need Water
Remember when stocks fell 20% between September and December last year?
Water stocks bucked the trend. In fact, California Water Services Group (CWT) and American States Water (AWR) rose 8.2% and 4.7%, respectively, during that period.
Same story for water infrastructure firm AquaVenture Holdings Ltd. (WAAS). While the S&P 500 was in freefall, AquaVenture shot up 9.0%.
