✕

Markets

Insider Trading

Hedge Funds

Retirement

Opinion

10 Best Water Recycling Stocks to Buy

Page 1 of 5

Water recycling stocks offer exposure to companies that treat used water so it can serve another purpose, from industrial cooling and manufacturing to irrigation and, with appropriate treatment, drinking-water supply. For investors, the opportunity spans treatment equipment, filtration, chemicals, engineering, and services that help customers reduce freshwater consumption.

The potential scale is substantial. According to the World Bank’s Scaling Water Reuse report published last year, potable and industrial reuse capacity could expand eightfold by 2040 to 430 million cubic meters per day, supported by targeted investment and enabling regulations. The report identifies up to $340 billion in potential investment by that date. These are conditional estimates, but they demonstrate how water reuse could become a larger infrastructure market.

The economics depend on location and application. The World Bank finds that reuse projects have the strongest business case where wastewater is available close to the customer, particularly in urban centers and industrial parks. For businesses supplying these projects, the opportunity therefore depends on delivering reliable water at a cost that makes sense for the end user.

Demand Extends From Municipal Infrastructure to Manufacturing

Water reuse is gaining attention as communities balance industrial expansion with pressure on existing supplies. The US Environmental Protection Agency’s National Water Reuse Action Plan identifies growing demand from data centers and manufacturing, alongside changing precipitation patterns, as challenges to long-term water availability. The agency released its updated Water Reuse Action Plan 2.0 on April 16, 2026, expanding its focus on industrial and technology applications.

This demand creates opportunities across several parts of the water-treatment process. These services are increasingly relevant to manufacturers seeking greater operational efficiency and lower freshwater consumption.

Water treatment is one part of the infrastructure needed to support industrial and technological expansion. Our 10 Best Stocks to Buy for Next-Gen Data Centers explore the wider buildout, including cooling and power systems. For water-treatment suppliers, the opportunity lies in helping these facilities meet operating requirements while managing freshwater consumption.

What Makes a Strong Water Recycling Stock?

Investing in water recycling requires looking beyond the importance of the resource itself. Companies must convert customer demand into profitable orders, successful project execution, and recurring revenue. Valuation also matters: a favorable industry outlook can already be reflected in the share price.

The same investment discipline applies across the businesses covered in our 13 Best Infrastructure Stocks to Buy Right Now. For water-related companies, investors should examine whether contracts and repeat business can generate enough cash to fund expansion and reward shareholders, rather than relying on demand forecasts alone.

The following 10 stocks represent different parts of the water recycling ecosystem. They include diversified companies with meaningful treatment, filtration, reuse, or engineering operations, alongside businesses serving broader industrial markets. Their investment cases depend on both their water-related opportunities and the performance of their other operations.

Our Methodology

For this article, we reviewed financial media coverage to identify companies with meaningful water recycling operations, including wastewater treatment, filtration, and water reuse solutions. Our list includes diversified businesses with exposure to engineering, industrial services, and other markets, rather than exclusively pure-play water recycling companies. Finally, we ranked the selected stocks in ascending order by the number of hedge funds holding stakes in each company, using Insider Monkey’s hedge fund database as of Q2 2026.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Insider Monkey’s quarterly newsletter strategy selects 14 small-cap and large-cap stocks every quarter and has returned 612% since May 2014, beating its benchmark by 375 percentage points (see more details here).

10. Stantec Inc. (NYSE:STN)

Number of Hedge Fund Holders: 24

Stantec Inc. (NYSE:STN) designs wastewater treatment plants, water reclamation facilities, and related infrastructure. Its water recycling exposure comes through engineering work needed to expand treatment capacity and modernize aging systems.

Water delivered nearly 12% organic growth in Q2 2026. Within Stantec Inc.’s Global region, water growth exceeded 20%, supported by long-term agreements and public investment across the UK, Australia, and New Zealand. Canadian wastewater and biosolids projects also generated double-digit water growth.

These agreements provide work beyond individual construction projects. Our coverage of Stantec’s five-year Melbourne water program shows how population growth is translating into treatment and sewer infrastructure assignments.

Water backlog grew more than 10% organically during the quarter. Management explained that large UK water frameworks enter backlog only when specific work is assigned. Further assignments could therefore support revenue beyond the orders currently reported.

Recent wins include preliminary design and evaluation work at Colorado’s Drake Water Reclamation Facility, a 23-million-gallon-per-day wastewater treatment plant. The project aims to improve debris removal and treatment reliability.

Delivering the growing workload remains essential. Stantec Inc. is adding staff, while slower project starts held overall US organic growth flat during the quarter. Strong water demand supports the outlook, but assignment timing and staffing will determine how quickly orders become revenue. Net debt of 1.3 times adjusted EBITDA provides financial flexibility as that work progresses.

9. Select Water Solutions, Inc. (NYSE:WTTR)

Number of Hedge Fund Holders: 33

Select Water Solutions, Inc. (NYSE:WTTR) collects, treats, and recycles water generated by oil and gas production. Its expanding infrastructure network gives producers reliable outlets for wastewater while building a larger base of contracted revenue.

In Q3 2026, produced-water volumes handled reached 1.7 million barrels daily, up 14% sequentially and more than 30% year-over-year. Water Infrastructure revenue reached $110 million, with a 57% gross margin before depreciation and amortization. That follows the near-doubling of quarterly profit that sent Select shares to a record high in August.

The recently completed Pilot Water acquisition adds disposal capacity alongside Select’s recycling facilities. Connecting these networks should help the company recycle water where customers need it and redirect excess volumes to disposal sites. Select Water Solutions, Inc.’s management expects the broader offering to attract additional contracts.

Longer agreements strengthen revenue visibility. An August expansion with an investment-grade customer added more than 250,000 dedicated acres and extended an existing contract by 12 years at a higher rate. JPMorgan’s August initiation of Select Water Solutions, Inc. at Overweight, with a $24 target, supported this thesis, highlighting improving EBITDA and the growing contracted revenue base.

Investment remains a near-term burden. Third-quarter operating cash flow of $84 million fell short of $88 million in net capital spending. Select Water Solutions, Inc.’s quarterly interest expense is expected to reach $15 million–$17 million following acquisition financing, increasing the importance of integrating Pilot and translating growth into cash.

Page 1 of 5