Environmentalists have been saying for years that the earth is running out of clean water, and it's about time investors take note. Today one billion people lack access to clean drinking water, and that number is continuing to grow to include a wealthier, perhaps more game-changing population.
For perspective, the amount of moisture on earth has not changed since before the dinosaurs drank their fill. But only about 2.5% of the Earth water volume is considered "fresh," 70% of which is frozen in (melting) glaciers.
Global climate change, melting ice caps, rising sea levels, contaminated groundwater, and reckless sanitation practices have all increased the difficulties associated with supplying fresh water. And as population rises demand naturally increases along with it.
Extreme climate events have exasperated the issue to dire levels. Every summer, without fail, you can find pictures of crowds desperately waiting with jugs around water wells across Africa, or dried up lakes with cracked surfaces paired with a withered tree, or perhaps a dead herd of cattle with bones piercing their skin in a testament to their agonizing starvation.
While it's true a great number of droughts occur in undeveloped regions, developed ones are finding themselves with an increasing need for water aid in the warmer months. 2011 saw severe to extreme drought in the South Pacific (including Australia), much of Europe including England and several areas in China and the Middle East.
In September alone the United States experienced extreme to severe drought in Texas, and parts of Wyoming, Montana, Georgia, Idaho, Maine, Kansas, Missouri, South Dakota, Minnesota, Washington, and Oregon.
"Climate change, the cost of water treatment and rising populations will eventually, if nothing is done, run some US cities, particularly western ones, dry," reports Time.
The rising demand for this basic need is fueling an industry devoted to providing solutions, and developed nations tend to have a bit more money and motivation to kick things into gear. So as long as water shortages continue to plague wealthy regions investors might want to consider the possibility of tracking utility stocks exposed to the trend.
Looking for ways to trade this trend? Here is a list of water utilities trading on U.S. markets. Use the links below to analyze further.
List sorted alphabetically. (Click here to access free, interactive tools to analyze these ideas.)
List compiled by Eben Esterhuizen, CFA:
1. Artesian Resources (NAS: ARTNA) : Provides water, wastewater, and engineering services on the Delmarva Peninsula.
2. American Water Works (NYS: AWK) : Provides water and wastewater services to residential, commercial, industrial, public, and other customers in the United States and Canada.
3. American States Water (NYS: AWR) : Provides water, electric, and contracted services in the United States.
4. Connecticut Water Service (NAS: CTWS) : Operates as a regulated water company in Connecticut.
5. Consolidated Water (NAS: CWCO) : Develops and operates seawater desalination plants and water distribution systems.
6. California Water Service Group (NYS: CWT) : Provides water utility and other related services in California, Washington, New Mexico, and Hawaii.
7. Middlesex Water (NAS: MSEX) : Operates regulated water utility and wastewater systems in New Jersey, Delaware, and Pennsylvania.
8. Pennichuck (NAS: PNNW) : Engages in the collection, storage, treatment, and distribution of potable water for domestic, industrial, commercial, and fire protection service markets primarily in New Hampshire.
9. SJW (NYS: SJW) : Engages in the production, purchase, storage, purification, distribution, wholesale, and retail sale of water.
10. Aqua America (NYS: WTR) : Operates regulated utilities that provide water or wastewater services in the United States.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Rebecca Lipman and Eben Esterhuizen do not own any of the shares mentioned above.
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