#7 - Xylem (NYSE:XYL)
The last stock on this list is by a company that’s attempting to use technology to address the emerging water scarcity concerns. According to Xylem (NYSE:XYL) by the year 2025, “1.8 billion people will be living in countries or regions with absolute water scarcity.”
That adds urgency to the company’s mission of developing technology applications to the water and wastewater management industries. The company ”offers hundreds of solutions backed by a comprehensive, integrated portfolio of services designed to ensure that water and wastewater treatment equipment keeps running at its best.”
One of the key problems that Xylem can help to solve is the issue of a leaky pipe. This is particularly important with an aging infrastructure. The average water main in the United States hasn’t been replaced since the 1970s.
That being said, XYL stock is down 22% for the year and the consensus price target of analysts surveyed by MarketBeat give the stock about 9% upside. Still with the company projected to post double digit revenue growth in the next five years, Xylem may be a good long-term play for patient investors.
About Xylem
Xylem Inc, together with its subsidiaries, engages in the design, manufacture, and servicing of engineered products and solutions worldwide. It operates through four segments: Water Infrastructure, Applied Water, Measurement & Control Solutions, and Integrated Solutions and Services. The Water Infrastructure segment offers products, including water, storm water, and wastewater pumps; controls and systems; filtration, disinfection, and biological treatment equipment; and mobile dewatering equipment and rental services under the ADI, Flygt, Godwin, Sanitaire, Magneto, Neptune Benson, Ionpure, Leopold, Wedeco, and Xylem Vue brands.
Read More - Current Price
- $140.03
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 8 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $140.70 (0.5% Upside)
In addition to weather-related factors, water stocks will continue to offer a potentially enticing play due to other trends such as the focus on ESG (environmental, social, and corporate governance) issues. Yet even with the essential role that water plays in our lives, many investors would be surprised to learn that water is a much smaller market than oil.
Deane Dray, of RBC Capital Markets estimates the global water business to be approximately $655 billion a year. Crude oil, by comparison, is about $3 trillion. It's also easier to transport crude oil than to transport water. Both of these facts create compelling trading opportunities for investors in water stocks.
And like many other sectors, quality matters. Investors should be careful to look for the water stocks with the best opportunities for growth. However, that doesn't mean that investors should forget about utility companies. In fact, at times like these defensive sectors like utilities shine the brightest.
The stocks in this presentation show why it's the businesses that make the best use of technology that have a real opportunity to shine during this crisis.
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