In this article, we discuss 10 best water stocks to buy. If you want to see more stocks in this selection, check out 5 Best Water Stocks To Buy.
As of November 10, 84% of the water and sewer ratings assigned by Fitch had a Stable Rating Outlook. Nearly 14% have a Positive Rating Outlook or are on Rating Watch Positive, and only 3% have a Negative Rating Outlook or are on Rating Watch Negative. The global functional water market was worth $15.1 billion in 2022. Moving forward, IMARC Group forecasts the market to reach $24.8 billion by 2028, indicating a growth rate of 7% during 2023-2028.
Concerns of economic slowdown, the war in Ukraine, lockdowns in China, and the threats of stagflation facing the global market are pressuring the water industry players to be highly vigilant, control costs, and adopt cutting edge technology. The water sector is one of the most defensive plays in the current market, as demand for drinking water and other water services will never diminish regardless of the economic backdrop. As investors actively seek out defensive equities to secure their portfolios, they can benefit from the water industry, which is ever evolving. The global population has recently hit 8 billion, which means demand for water will continue to increase. To benefit from the growing sector, some of the best water stocks to invest in include American Water Works Company, Inc. (NYSE:AWK), Essential Utilities, Inc. (NASDAQ:WTRG), and Primo Water Corporation (NYSE:PRMW).
Our Methodology
We selected the following water stocks based on positive analyst coverage, strong business fundamentals, and market visibility. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. The list is arranged according to the number of hedge fund holders in each firm.
Photo by Silvan Schuppisser on Unsplash
Best Water Stocks To Buy
10. Artesian Resources Corporation (NASDAQ:ARTNA)
Number of Hedge Fund Holders: 5
Artesian Resources Corporation (NASDAQ:ARTNA) was founded in 1905 and is headquartered in Newark, Delaware. The company provides water, wastewater, and other services in Delaware, Maryland, and Pennsylvania. It distributes water to residential, commercial, industrial, governmental, municipal, and utility customers. Additionally, Artesian Resources Corporation (NASDAQ:ARTNA) specializes in wastewater collection, treatment infrastructure, and wastewater services for customers in Delaware.
On November 3, Artesian Resources Corporation (NASDAQ:ARTNA) reported a Q3 GAAP EPS of $0.65 and a revenue of $26.58 million, up 6.7% on a year-over-year basis. On November 4, Artesian Resources Corporation (NASDAQ:ARTNA) declared a $0.2784 per share quarterly dividend, a 2% increase from its prior dividend of $0.2729. The dividend was paid to shareholders on November 23. The dividend yield on December 13 came in at 2.01%.
According to Insider Monkey’s third quarter database, 5 hedge funds were long Artesian Resources Corporation (NASDAQ:ARTNA), with combined stakes worth $17.86 million, compared to 2 funds in the prior quarter worth $17.72 million. Jim Simons’ Renaissance Technologies is the largest stakeholder of the company, with 319,111 shares worth $15.35 million.
Like American Water Works Company, Inc. (NYSE:AWK), Essential Utilities, Inc. (NASDAQ:WTRG), and Primo Water Corporation (NYSE:PRMW), Artesian Resources Corporation (NASDAQ:ARTNA) is one of the best water stocks to invest in.
9. The York Water Company (NASDAQ:YORW)
Number of Hedge Fund Holders: 9
The York Water Company (NASDAQ:YORW) was incorporated in 1816 and is based in York, Pennsylvania. The company impounds, purifies, and distributes drinking water. It owns and operates wastewater collection systems, wastewater treatment systems, reservoirs, water pipelines, and groundwater wells. The York Water Company (NASDAQ:YORW) serves customers in the fixtures and furniture, electrical machinery, food products, paper, ordnance units, textile products, air conditioning systems, laundry detergents, barbells, and motorcycle industries. The York Water Company (NASDAQ:YORW) is one of the best water stocks to invest in.
On November 3, The York Water Company (NASDAQ:YORW) reported Q3 GAAP earnings per share of $0.40, beating market estimates by $0.02. The revenue came in at $15.81 million, up 9% year-over-year, exceeding Wall Street consensus by $0.81 million.
According to Insider Monkey’s data, The York Water Company (NASDAQ:YORW) was part of 9 hedge fund portfolios at the end of the third quarter of 2022, compared to 7 in the prior quarter. Stuart J. Zimmer’s Zimmer Partners held the biggest stake in the company, with 589,781 shares worth $22.6 million.
8. SJW Group (NYSE:SJW)
Number of Hedge Fund Holders: 9
SJW Group (NYSE:SJW) provides water utility services in the United States. It specializes in the production, purchase, storage, purification, distribution, wholesale, and retail sale of water and wastewater services. SJW Group (NYSE:SJW) was incorporated in 1985 and is headquartered in San Jose, California. SJW Group (NYSE:SJW) paid a $0.36 per share quarterly dividend to shareholders on December 1. It is one of the premier water stocks to monitor.
On October 28, SJW Group (NYSE:SJW) reported a Q3 GAAP EPS of $0.82 and a revenue of $176 million, outperforming Wall Street forecasts by $0.05 and $4 million, respectively. The company reaffirmed the full-year 2022 guidance range of $2.30 to $2.40 earnings per diluted share, versus a consensus of $2.37. SJW Group (NYSE:SJW) expects regulated infrastructure investments of approximately $223 million in 2022.
UBS analyst Gregg Orrill initiated coverage of SJW Group (NYSE:SJW) on November 30 with a Buy rating and an $85 price target as part of a broader research note on Water Utilities titled “Looking for Value”. Water utilities have attractive characteristics for a defensive market backdrop and offer optimistic fundamentals, including 7% EPS growth potential and meaningful investment opportunities from pipe replacement and water access, the analyst wrote in a research note. He added that stock trades at a 5% discount to the sector on a price to earnings basis despite higher regulatory clarity than its competitors and an adequate water supply.
According to Insider Monkey’s Q3 data, 9 hedge funds were bullish on SJW Group (NYSE:SJW), compared to 8 funds in the last quarter. Israel Englander’s Millennium Management is a prominent stakeholder of the company, with 206,878 shares worth about $12 million.
7. Middlesex Water Company (NASDAQ:MSEX)
Number of Hedge Fund Holders: 9
Middlesex Water Company (NASDAQ:MSEX) was incorporated in 1896 and is headquartered in Iselin, New Jersey. The company owns and operates regulated water utility and wastewater systems. It operates in two segments, Regulated and Non-Regulated. The company provides water services on a retail and wholesale basis to residential, commercial, industrial, and fire protection customers, in addition to providing regulated wastewater systems in New Jersey and Delaware. It is one of the best water stocks to consider.
On October 24, Middlesex Water Company (NASDAQ:MSEX) announced a $0.3125 per share annual dividend, a 7.8% increase from its prior dividend of $0.29. The dividend was distributed to shareholders on December 1. The company’s Q3 revenue of $47.73 million climbed nearly 20% year-over-year, beating market estimates by $0.73 million.
Baird analyst Ben Kallo on May 2, 2022 maintained an Outperform rating on Middlesex Water Company (NASDAQ:MSEX) but lowered the price target on the shares to $99 from $102. The company estimates that it will invest roughly $229 million over the next three years providing a runway for increasing earnings and the first stage of its rate hike in New Jersey should help drive growth, the analyst told investors in a research note.
According to Insider Monkey’s data, 9 hedge funds held long positions in Middlesex Water Company (NASDAQ:MSEX) at the end of Q3 2022, compared to 11 funds in the prior quarter. D E Shaw is a significant stakeholder of the company, with 18,856 shares worth $1.45 million.
6. California Water Service Group (NYSE:CWT)
Number of Hedge Fund Holders: 15
California Water Service Group (NYSE:CWT) is a provider of water utility and related services in California, Washington, New Mexico, Hawaii, and Texas. The company is involved in the production, treatment, testing, and distribution of water for domestic, industrial, public, irrigation, and fire protection purposes. On November 23, Washington Water Service, a subsidiary of California Water Service Group (NYSE:CWT), announced that it has acquired Driftwood Valley Association’s water system assets. Washington Water plans to invest further in local water system infrastructure to maintain a reliable supply of clean water to customers for their everyday needs and to firefighters for emergencies.
On November 30, UBS analyst Gregg Orrill initiated coverage of California Water Service Group (NYSE:CWT) with a Neutral rating and a $67 price target. Water utilities have attractive characteristics and they are defensive plays, offering positive fundamentals such as 7% EPS growth potential and significant investment opportunities, the analyst told investors.
According to Insider Monkey’s data, 15 hedge funds were bullish on California Water Service Group (NYSE:CWT) at the end of September 2022, compared to 12 funds in the last quarter. Ian Simm’s Impax Asset Management is the largest stakeholder of the company, with 1.5 million shares worth $82 million.
In addition to American Water Works Company, Inc. (NYSE:AWK), Essential Utilities, Inc. (NASDAQ:WTRG), and Primo Water Corporation (NYSE:PRMW), California Water Service Group (NYSE:CWT) is one of the premier stocks for exposure to the water sector.
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Disclosure: None. 10 Best Water Stocks To Buy is originally published on Insider Monkey.
