Water Asset Management’s 2023 Outlook for Investing in Water Stocks

April 14, 2023

Increasing economic and geopolitical uncertainty makes safe, profitable investing challenging. One certainty that investors can count on is the growing need for safe, reliable water and the steadily increasing spending on water-related infrastructure. These fundamental factors drive stable, consistent earnings growth for many of the global water companies in Water Asset Management’s (WAM) portfolios.

The Need for Water

Water is an essential resource, crucial for life and economic activity. Despite this, the world is in a water crisis due to the rising population, climate change, waste and inefficiencies, and pollution. This crisis creates massive added demand for water-related infrastructure and services, which results in significantly increasing investment in the water sector.

Stable Earnings Growth

One of the key advantages of investing in water stocks is their stable and consistent earnings growth. WAM’s portfolio has median earnings growth of ~ 8%, while the S&P 500’s weighted average earnings growth estimate for 2023 is 4%.

High Conviction Investing

Two areas of particular interest to investors are investor-owned water utilities and water treatment stocks. Water utilities consistently provide investors with outsized, risk-adjusted returns, from stable, consistent earnings growth. Water treatment stocks also grow fundamentally, and their businesses are supported by increased infrastructure spending.

The need for essential water resources is permanent, and the spending on water-related infrastructure is growing, making water stocks an attractive investment option in 2023 and for years to come.