In this article, we discuss 5 best water stocks to buy. If you want to read our discussion on the water industry, head over to 11 Best Water Stocks To Buy.
5. Primo Water Corporation (NYSE:PRMW)
Number of Hedge Fund Holders: 23
Primo Water Corporation (NYSE:PRMW) specializes in providing water solutions for both residential and commercial customers. The company’s offerings include bottled water, water dispensers, purified bottled water, self-service refill drinking water, premium spring and mineral water, sparkling and flavored water, filtration equipment, and coffee. It is one of the top water stocks to invest in.
On November 2, Primo Water Corporation (NYSE:PRMW) announced that it plans to divest a substantial portion of its global operations to Culligan in an all-cash deal worth up to $575 million. The transaction excludes the Aimia Foods, United Kingdom, Portugal, and Israel businesses, with plans for each of these entities to be sold throughout 2024.
According to Insider Monkey’s third quarter database, 23 hedge funds were bullish on Primo Water Corporation (NYSE:PRMW), compared to 24 funds in the preceding quarter. Seth Rosen’s Nitorum Capital is the biggest stakeholder of the company, with 2.9 million shares worth nearly $40 million.
Heartland Small Cap Value Strategy made the following comment about Primo Water Corporation (NYSE:PRMW) in its Q4 2022 investor letter:
“A new addition to the portfolio last quarter was Primo Water Corporation (NYSE:PRMW), one of the largest providers of multi-gallon bottled drinking water for consumers and businesses in North America and Europe. While water isn’t necessarily considered economically sensitive, investors have underappreciated the stock partially due to fears that the downturn could hurt sales since the alternative—tap water—is free.
PRMW’s business model, which includes direct delivery, refills, exchanges, and the sale of in-home dispensers, should prove recession resistant and durable. The company benefits from concerns over the quality of tap water, given the aging municipal infrastructure and the phasing out of single-use plastic bottles. We felt comfortable initiating a position after the company raised its revenue and earnings guidance and the CEO aggressively purchased shares. Plus, the stock trades at just 8.7X EV/EBITDA, a significant discount to its peer group and true worth.”
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4. American Water Works Company, Inc. (NYSE:AWK)
Number of Hedge Fund Holders: 35
American Water Works Company, Inc. (NYSE:AWK) provides water and wastewater services in the United States. Its customer base includes residential, commercial, industrial, and public sector entities. American Water Works Company, Inc. (NYSE:AWK) operates water and wastewater treatment plants, pumping stations, and a significant network of transmission and distribution mains. It is one of the best water stocks to monitor.
On November 1, American Water Works Company, Inc. (NYSE:AWK) reported a Q3 GAAP EPS of $1.66 and a revenue of $1.17 billion, falling in-line with market consensus. Additionally, the company is set to pay a $0.7075 per share quarterly dividend on December 1.
According to Insider Monkey’s third quarter database, 35 hedge funds were bullish on American Water Works Company, Inc. (NYSE:AWK), compared to 34 funds in the last quarter. Ian Simm’s Impax Asset Management is the leading position holder in the company, with 5.6 million shares worth $695.85 million.
ClearBridge Global Infrastructure Value Strategy made the following comment about American Water Works Company, Inc. (NYSE:AWK) in its Q4 2022 investor letter:
“Turning to the U.S. and Canada, U.S. electric utility PG&E and U.S. water company American Water Works Company, Inc. (NYSE:AWK) also made strong contributions. AWK provides water and wastewater utility services to customers across several states within the U.S. Shares did well after AWK announced the acquisition of a municipal facility, providing additional opportunities for growth.”
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3. Pentair plc (NYSE:PNR)
Number of Hedge Fund Holders: 36
Pentair plc (NYSE:PNR) is a global provider of water solutions, operating through three segments – Pool, Water Solutions, and Industrial & Flow Technologies. The company designs, manufactures, and sells pool equipment, accessories, and water treatment products for residential and commercial use.
On October 24, Pentair plc (NYSE:PNR) reported a Q3 non-GAAP EPS of $0.94 and a revenue of $1 billion, outperforming Wall Street estimates by $0.07 and $13.56 million, respectively.
According to Insider Monkey’s third quarter database, 36 hedge funds were bullish on Pentair plc (NYSE:PNR), compared to 33 funds in the prior quarter. Dmitry Balyasny’s Balyasny Asset Management is a prominent stakeholder of the company, with 3 million shares worth approximately $195 million.
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2. Xylem Inc. (NYSE:XYL)
Number of Hedge Fund Holders: 40
Xylem Inc. (NYSE:XYL) specializes in designing, manufacturing, and servicing engineered products and solutions for water and wastewater applications globally. The company operates through three segments – Water Infrastructure, Applied Water, and Measurement & Control Solutions. Xylem Inc. (NYSE:XYL) serves residential, commercial, industrial, and critical infrastructure sectors. On November 17, Xylem Inc. (NYSE:XYL) declared a $0.33 per share quarterly dividend. The dividend is payable on December 19, to shareholders of record on November 21.
According to Insider Monkey’s third quarter database, 40 hedge funds were bullish on Xylem Inc. (NYSE:XYL), compared to 37 funds in the preceding quarter. Anand Parekh’s Alyeska Investment Group is a significant position holder in the company, with 1.93 million shares worth $175.7 million.
Aristotle Capital Value Equity Strategy made the following comment about Xylem Inc. (NYSE:XYL) in its Q3 2023 investor letter:
“Xylem Inc. (NYSE:XYL), the water equipment and services supplier, was the largest detractor for the quarter. After closing the transformational acquisition of Evoqua in May 2023, long‐time CEO Patrick Decker announced he would retire at the end of 2023 and COO Matthew Pine will step into the top position. Concurrently, Xylem announced a change in its CFO, with William Grogan joining from IDEX Corporation where he has served as CFO since 2017. While C‐suite turnover is not desirable, it is inevitable. Moreover, we see the company’s succession planning as well thought out and well executed. Meanwhile, Xylem reported double‐digit increases in revenue across all segments and end markets amid strong global demand from public utilities, as well as industrial, commercial and residential clients that seek solutions to treat, test, transport and preserve water. 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. We will evaluate the announced management transitions and will closely monitor the company’s ongoing integration of Evoqua.”
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1. Ecolab Inc. (NYSE:ECL)
Number of Hedge Fund Holders: 53
Ecolab Inc. (NYSE:ECL) is a global provider of water, hygiene, and infection prevention solutions and services. The company operates through Global Industrial, Global Institutional & Specialty, Global Healthcare & Life Sciences, and Other segments. It offers water treatment, cleaning, and sanitizing solutions to manufacturing, food and beverage processing, and healthcare industries, to name a few. Ecolab Inc. (NYSE:ECL) is one of the best water stocks to invest in.
On October 31, Ecolab Inc. (NYSE:ECL) reported a Q3 non-GAAP EPS of $1.54, beating Wall Street estimates by $0.02. The revenue increased 7.9% year-over-year to $3.96 billion. However, revenue fell short of market consensus by $50 million.
According to Insider Monkey’s third quarter database, 53 hedge funds were bullish on Ecolab Inc. (NYSE:ECL), compared to 56 funds in the last quarter. Bill & Melinda Gates Foundation Trust is the largest stakeholder of the company, with 5.2 million shares worth $884 million.
ClearBridge Sustainability Leaders Strategy made the following comment about Ecolab Inc. (NYSE:ECL) in its Q2 2023 investor letter:
“A rebound for materials in June was helpful for water and hygiene solution company Ecolab Inc. (NYSE:ECL), where strong pricing and productivity gains are more than offsetting ongoing inflationary pressure, as well as aluminum packaging company Ball, which rose on reports of a possible sale of its aerospace unit.”
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