American Water Works Co., Inc. (AWK), Aqua America Inc (WTR): Accessing the Water Investment Theme

For all three companies, water’s essential role in many industries offers further growth opportunities.  Many companies can see the benefits of investing to lower water consumption in their industrial operations and improve their business efficiencies. Both American Water Works Co., Inc. (NYSE:AWK) and Aqua America Inc (NYSE:WTR) talk about the building opportunity supplying the shale oil industry and stronger points in Xylem Inc (NYSE:XYL)’s recent numbers included good spending levels within the construction and agriculture sectors.

So, in summary, how do you compare and contrast these three companies?  American Water Works Co., Inc. (NYSE:AWK) and Aqua America Inc (NYSE:WTR) offer a more stable profile in both earnings and dividends.  This relative stability does come at a price though.  American Water Works trades at a forward P/E of 19 while Aqua America, boosted by a slightly more aggressive deal-making culture, trades on a forward P/E of  24. Both shares are yielding just under 2.5%.

Xylem Inc (NYSE:XYL) also pays a near 2% dividend yield but trades on a depressed forward P/E multiple of x17.  Recovery here would offer more upside but the volatility levels with this share is likely to be higher.

Water is a powerful global theme. Close inspection of these three names may help investors solve how to access the global water thematic opportunities in the stock market.

Chris Bailey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 

The article Accessing the Water Investment Theme originally appeared on Fool.com.

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