| |  | Digg It! |
| Friday, 13 July 2007 | |
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Here, the two investment advisory experts offer a trio of ideas from their A-list of most important and best-positioned stocks for those seeking exposure to this sector. “The largest of the water group is Suez SA (NYSE: SZE). This is a French company that provides environmental services such as water treatment, distribution and waste managementThe market cap is over $75 billion right now and it is proving to be a very stable company. “This company isn’t under the radar as it’s near an all-time high. It’s not one to chase necessarily but might be worth buying on pullbacks. It has a 2.74% dividend yield and the return on equity is over 22%. This company has the resources and market cap to buy up some of the smaller companies in the group to continue to grow. “At the other end of the industry spectrum is Basin Water (NASDAQ: BWTR). This is a California based company that is one of the more speculative picks on this list. However, it has big potential. “This $130 million company designs, builds, and implements systems for the treatment of contaminated groundwater. The company has developed a proprietary, scalable ion-exchange wellhead treatment system for that contaminated groundwater. “Remember that only part of the issue with the global water shortage is about access to usable water. The other part of the problem is contaminated water. And this small company may have the technology to treat it. “Their sales the last 3 years have an average growth rate over 100% and is scheduled to be profitable in 2008. They are heavily shorted right now, meaning there are a lot of investors betting against this company. Be careful; as with any technology company, if it flops, the company could go under. “Danaher Corp. (NYSE: DHR) isn’t a pure water play but provides a lot of the equipment to monitor and test other equipment in the water industry. It would be comparable to a supplier of dental equipment to the dentist. "Most of their sales come from the U.S. but the real growth is aboardy. This is a solid company with margins over 44%. They continue to grow and yet they still are not very expensive when compared to their level of profits. “In addition, the stock is cheap when we look at the historical price paid compared to cash flow. Both their sales and earnings per share have been accelerating since 1999. The stock is attractive right now as it hasn’t moved since November 2006." |
“Unlike other resources, there is no substitute for water,” says 