Water Scarcity Stocks to Watch (AWK, GWRS, YORW, SITS)
As manager of Scion Capital hedge fund, Micheal Burry applied his expertise in value investing to generate extraordinary returns. When the housing bubble imploded, Burry’s contrarian bets on credit default swaps paid off so well that he was featured in The Big Short, a movie inspired by a Michael Lewis book. It featured stories of the economic crisis through the lens of a few investors who bet against the housing bubble.
At the end of the movie, viewers got a hint of where Burry was turning his attention to next. The final line of the movie was emblazoned with his bold next investment:
“Michael Burry is focusing all of his trading on one commodity: Water” – The Big Short
So far, water scarcity has been a good bet. Over the past five years the benchmark for investing in sustainable water, Invesco Water Resources (ETF:PHO) is up 141%. Water demand globally is projected to increase by 55% between 2000 and 2050. Much of the demand is driven by agriculture, which accounts for 70% of global freshwater use, and food production will need to grow by 69% by 2035 to feed the growing population. Water withdrawal for energy, used for cooling power stations, is also expected to increase by over 20%. In other words, the near future presents one big freshwater drain after the next.
There are a few companies in the freshwater sector worth researching:
American Water Works Co. Inc. (NYSE:AWK)
If you are looking for the largest company in the space, AWK is most likely your answer with a $32 billion market capitalization and its $4 billion in annual revenue. AWK is diversified within several markets with approximately 15 million customers and almost 55,000 miles of pipes.
Global Water Resources, Inc. (Nasdaq:GWRS)
Global Water Resources is a rare company that pays a monthly dividend. Keeping the profits flowing like water. In fact, it is the only American water company that pays dividends on a monthly basis. Water stocks are often praised for their very stable and secure cash flows. Adding the element of receiving dividends on a monthly basis further adds to investor certainty and total return predictability.
York Water Company (NYSE:YORW)
YORW is a water investment with a couple of differentiating factors. It is the oldest investor-owned water utility in the United States, having functioned continuously since 1816. What’s more impressive is the companies dividend history. The York Water showcases a spectacular record of over 200 years of uninterrupted dividend payments to shareholders, including 24 years of consecutive dividend annual increases as of today.
