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8 Water Stocks To Follow in 2019


This year was volatile for the stock market and our portfolio of water stocks told a different story.  The best performer in the portfolio improved by 18% while several others saw losses of over 10%. This series of articles dates back to 2012 with the intention of increasing awareness of water scarcity, potentially increase capital for water infrastructure and provide an opportunity to do more than just complain about rising water prices. We have been following a portfolio of stocks and ETFs for eight years now.

Year to date the Dow Jones Industrial Average is down 4.56% for the year. The Nasdaq is down 2.1%  and the Standard and Poor’s 500 is down 4.78%.  All were in positive territory during the year but experienced declines during the last few months of the year.  These same indexes were up dramatically last year. Let’s take a look at how the companies (associated with water) identified in January 2012 performed.

American Water Works Co. Inc. (NYSE: AWK)

This stock was up 4% in 2018 after increases of 29% last year 24% in 2016 and 15% in 2015. This stock was a $25 stock in 2011. I’m not sure where we could have found such good gains in the past eight years in such a conservative industry. American Water Works provides water and wastewater services to 15 million people in 30 U.S. states and parts of Canada.

Aqua America Inc. (NYSE: WTR)

Aqua American lost over 10% this year after gains of 34% last year. Aqua America is a holding company for a group of regulated utilities serving 3 million customers in 13 states ranging from Texas to Maine. This stock has returned around 50% for the past five years outperforming the Dow Jones Industrial Average which saw gains of about 39%.

California Water Service Group (NYSE: CWT)

This water company is a utility serving California, Washington, New Mexico, and Hawaii, and American States Water Co. Year to date 2018 California Water Service Group is up almost 6%. In 2017 it was up 26% and in 2016 up 48%. A large majority of their revenue comes from states hit hard with drought. Over the last 3 years, it has gained 91%.

American States Water Company (NYSE: AWR)

This California-based utility provides water, electric, and contracted services in the United States. In 2018 it saw gains of 18% after rising 30% in 2017. During the past three years, this stock is up 58% and been a solid performer over the last eight years and is diversified across the United States.


Exchange Traded Funds or ETFs

Another option to invest in water is Exchange Traded Funds (ETF). Think of an exchange-traded fund as a mutual fund that trades on a public exchange, like the New York Stock Exchange. You get the diversification of a fund with the added benefit of the liquidity of a public exchange.

In 2018 the performance of ETFs for water was dismal. Below is the past performance of a few of the popular water ETFs we have been following:

PowerShares Global Water Portfolio (PIO)

This ETF is based on the Palisades Global Water Index. It focuses on companies providing potable water. This year the ETF is down 11%  after finishing up 24% last year.

PowerShares Water Resources Portfolio (PHO)

The largest Water ETF with more than $1 billion in assets. It also invests in companies providing potable water. In 2018  it is down 7% after an increase of 22% last year. 

Guggenheim S&P Global Water Index ETF (CGW)

This ETF corresponds to the S&P Global Water Index. This ETF is the first US listed global Water ETF. It is down10% after gaining  25% in 2017.


First Trust ISE Water Index Fund (FIW)

Focuses on companies with wastewater and potable water direction. It is down 9%this year after good gains last year.

As you can see 2018 was not a good year for the stock market and yet several of the water stocks did well. The ETFs underperformed for the year which was disappointing.  Looking at the last three years all of the stocks outperformed the Dow while the ETFs underperformed the Dow.

Please do not take any of the information on this post as a recommendation to buy the stocks or ETFs. This is simply an attempt to start a meaningful conversation on the blog about investing in water. What do you think is in store for the stock market and water stocks in 2019? If you enjoyed this article please consider subscribing or following me on twitter @H2oTrends.

 

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Richard Restuccia

Richard is a water management evangelist. He believes passionately in water efficiency and sees the financial and social benefits far too often to keep a secret. Richard is a spokesperson at industry events and on the Hill to provide direction and insight on landscape water management best practices. Richard puts his words into action through service on various boards and committees. He served on the Irrigation Association’s Board of Directors. Richard also writes for other publications and is an award winning contributor to Lawn & Landscape Magazine. In 2014 his efforts were recognized with a “Leadership in Landscape” award. He has a great interest in the supply of clean water for people in developing countries and as an outdoorsman, spends his free time running, swimming and surfing.

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