5 Best Water Stocks To Buy

In this article, we discuss 5 best water stocks to buy. If you want to see more stocks in this selection, check out 10 Best Water Stocks To Buy. 

5. Pennon Group Plc (OTC:PEGRF) 

Number of Hedge Fund Holders: N/A

Pennon Group Plc (OTC:PEGRF) was incorporated in 1989 and is based in Exeter, the United Kingdom. The company provides water and wastewater services for customers in Cornwall, Devon, and parts of Dorset and Somerset, water-only services in Dorset, Hampshire, and Wiltshire, and water and wastewater retail services to non-household customers in Great Britain. On November 30, Pennon Group Plc (OTC:PEGRF) posted a 1H non-GAAP EPS of 7.9p and a revenue of £425.5 million, up 9.3% year-over-year. 

On October 4, RBC Capital analyst Alexander Wheeler upgraded Pennon Group Plc (OTC:PEGRF) to Outperform from Sector Perform with a price target of 975 GBp, down from 1,050 GBp. The analyst sees “significant value” at present share levels despite the continuous environmental investigation. The company has constantly been the top performer in the water sector on returns, “and we do not believe that will change overnight,” the analyst wrote in a research note. He said the stock is “too cheap to ignore.”

4. Xylem Inc. (NYSE:XYL)

Number of Hedge Fund Holders: 22

Xylem Inc. (NYSE:XYL) is a New York-based company that engages in the design, manufacture, and servicing of engineered products and services for water and wastewater applications in the United States, Europe, the Asia Pacific, and internationally. The company operates through three segments – Water Infrastructure, Applied Water, and Measurement & Control Solutions. 

On November 10, Xylem Inc. (NYSE:XYL) declared a $0.30 per share quarterly dividend, in line with previous. The dividend is payable on December 20, to shareholders of record on November 22. It is one of the best water stocks to invest in. 

Citi analyst Andrew Kaplowitz on December 9 raised the price target on Xylem Inc. (NYSE:XYL) to $123 from $109 and kept a Neutral rating on the shares. The analyst said mega-trends and “still emerging fiscal tailwinds” should help moderate potential downside for industrials in a slowing macro-economic environment. 

Among the hedge funds tracked by Insider Monkey, Xylem Inc. (NYSE:XYL) was part of 22 public stock portfolios at the end of Q3 2022, compared to 25 in the prior quarter. Ian Simm’s Impax Asset Management is the biggest position holder in the company, with 1.12 million shares worth $98.2 million. 

Aristotle Capital made the following comment about Xylem Inc. (NYSE:XYL) in its Q3 2022 investor letter:

“Xylem Inc. (NYSE:XYL), the water equipment and services supplier, was a leading contributor for the quarter. The company’s solutions and technology continue to enjoy strong global demand as public utilities, as well as industrial, commercial and residential clients, seek solutions to treat, test, transport and preserve water. Similar to other industries, Xylem’s business has been impacted in the short term by the effects of inflation and chip‐supply constraints (that are now moderating), leading to an increasing backlog that has delayed the ability to fulfill orders. We believe Xylem’s portfolio of highly differentiated pumps, recognized for their quality and critical uses, as well as the company’s ability to cross‐sell and link other products, such as sensors and smart meters, will make it a one‐stop shop for utilities and protect the company from pure price competition. In our opinion, long‐term trends, such as water scarcity and the need to replace aging water infrastructure, create strong underlying demand for Xylem’s products through various parts of the economic cycle.”

3. Essential Utilities, Inc. (NASDAQ:WTRG)

Number of Hedge Fund Holders: 29

Essential Utilities, Inc. (NASDAQ:WTRG) is a Pennsylvania-based company that operates regulated utilities that provide water, wastewater, and natural gas services in the United States. It offers water services through operating and maintenance contracts with municipal authorities and third parties. The company posted market-beating Q3 2022 results and reaffirmed its FY 2022 guidance.

On December 7, Essential Utilities, Inc. (NASDAQ:WTRG) declared a $0.287 per share quarterly dividend, in line with previous. The dividend is payable on March 1, 2023 to shareholders of record on February 10. It is one of the premier water stocks to consider. 

According to Insider Monkey’s data, 29 hedge funds were long Essential Utilities, Inc. (NASDAQ:WTRG) at the end of Q3 2022, compared to 22 funds in the prior quarter. Israel Englander’s Millennium Management is one of the significant stakeholders of the company, with 1.2 million shares worth $50 million. 

2. Primo Water Corporation (NYSE:PRMW)

Number of Hedge Fund Holders: 30

Primo Water Corporation (NYSE:PRMW) is a Florida-based company that provides pure-play water solutions for residential and commercial customers. It offers bottled water, water dispensers, purified bottled water, mineral water, sparkling and flavored water, filtration equipment, and coffee. On November 10, Primo Water Corporation (NYSE:PRMW) reported a Q3 non-GAAP EPS of $0.22, in-line with market estimates. The revenue of $584.6 million climbed 6.1% year-over-year, beating Wall Street consensus by $6.07 million. 

On November 8, JPMorgan analyst Andrea Teixeira maintained an Overweight rating on Primo Water Corporation (NYSE:PRMW) but lowered the price target on the shares to $18 from $19. The analyst expects the company to report “solid” Q3 results with “resilient” demand. However, incremental currency headwinds will potentially affect sales and profitability, the analyst told investors in a research note.

According to Insider Monkey’s Q3 data, Primo Water Corporation (NYSE:PRMW) was part of 30 hedge fund portfolios, compared to 24 in the prior quarter. Kevin Oram and Peter Uddo’s Praesidium Investment Management is the leading position holder in the company, with 6.4 million shares worth $80.5 million. 

1. American Water Works Company, Inc. (NYSE:AWK)

Number of Hedge Fund Holders: 35

American Water Works Company, Inc. (NYSE:AWK) is a New Jersey-based company that provides water and wastewater services in the United States. On October 31, American Water Works Company, Inc. (NYSE:AWK) reaffirmed its full-year 2022 earnings per share guidance range of $4.39 to $4.49 on a weather normalized basis versus consensus EPS estimate of $4.44. The company has a long-term dividend growth expectation of 7% to 9%. 

On December 8, American Water Works Company, Inc. (NYSE:AWK) declared a $0.655 per share quarterly dividend, in line with previous. The dividend is payable on March 1, 2023 to shareholders of record on February 7. The dividend yield on December 14 came in at 1.65%. 

Wells Fargo analyst Jonathan Reeder on December 14 raised the price target on American Water Works Company, Inc. (NYSE:AWK) to $159 from $149 to reflect higher peer group multiples since his last update, while maintaining an Equal Weight rating on the shares. His outlook for the sector is not as bullish heading into 2023, nor is he outright bearish.

According to Insider Monkey’s data, American Water Works Company, Inc. (NYSE:AWK) was part of 35 hedge fund portfolios at the end of September 2022, compared to 29 in the prior quarter. Charles Montanaro’s Montanaro Asset Management is a prominent stakeholder of the company, with 158,900 shares worth $20.6 million. 

You can also take a look at 10 Best December Dividend Stocks To Buy and Most Advanced Countries in Artificial Intelligence.