Xylem Inc (XYL), American Water Works Company Inc (AWK), Siemens AG (ADR) (SI) – Water: Not a Drop to Drink, but Plenty of Money to Be Made

Page 1 of 2

Xylem IncWhether you know it or not, the world is facing a severe global water crisis.  Expanding demand for water has placed the natural resource under severe strain.  This high demand for water use is pulling a vacuum on the water industry, presenting an appealing long term investing opportunity.  In this article, I’ll outline the water crisis and three companies that are well-positioned to capitalize on this vacuum.

What’s the deal?

The global water crisis is best summarized in a series of quantitative facts, so here we go!  Of the global water supply, only 0.3% is available for human consumption.  With an exponentially increasing population, the demand for this finite amount of water is skyrocketing.  Water.org states that:

Women spend 200 million works hours daily to provide water for their families.

780 million people lack access to clean water.

3.4 million people die from a water related disease each year.

The water crisis strikes domestically as well.  Expanding industrial use in nuclear cooling, hydrofracking, and ever-increasing agricultural use is further increasing the water demand.  The American Society of Civil Engineers reports in the 2013 Report Card for America’s Infrastructure the following investments are necessary to repair American water infrastructure:

$21 billion for dam repair

$100 billion for levee repair

$15 billion in wastewater treatment system repair

$1 trillion in drinking water infrastructure repair

This rings in a total of $1.136 trillion required in U.S. government investment.

Now what?

The serious need for innovation in water conservation and supply and investment in water infrastructure has presented a long term profitable investing opportunity. The water industry is projected to increase from (2007) $522 billion to $961 billion by 2020.  This would place the water industry at a higher valuation than the global airline industry.  So, how can investors like you take advantage of this opportunity?

1. Xylem

Xylem Inc (NYSE:XYL) spun off from ITT Corp (NYSE:ITT) in 2011.  Xylem Inc (NYSE:XYL) offers a wide range of water products and  services including, but not limited to, the following:

Water quality logging and monitoring systems

Wastewater processing solutions

Large scale water transporting and handling systems

Desalination equipment

Xylem Inc (NYSE:XYL) is positioned to tackle the global water crisis through more than thirty individual markets, adding a safety net of diversification to an already appealing investment opportunity.

With 63% of revenue coming from international markets, and 20% of revenue coming from emerging markets, Xylem Inc (NYSE:XYL) has shown a commitment to addressing the crisis head on.  Xylem has a reasonable P/E of 19.45 and offers a 1.6% dividend yield.  Xylem Inc (NYSE:XYL) stock has traded flat for 2013, but it has just over $500 million in cash, and the shakedown from the spinoff is nearly complete, so future stock growth looks promising.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

The 10 Longest Wars of All Time

The 13 Worst Looking Foods that Taste Great

The 6 Most Gruesome Injuries Suffered During a Sports Match

The 20 Biggest Contracts in MLB History

The 7 Worst Blown Calls in Sports History

7 Free Ways to Advertise Your Business Online

The 18 Best R&B Songs of the 90’s

The 10 Most Dangerous States to be a Cop

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!