Critical resources are in the spotlight for controversial reasons, which may offer downwind benefits for water stocks to buy now. Essentially, the world is becoming a much more dangerous place, resulting in a pivot toward risk-off asset categories.
While that doesn’t necessarily mean water stocks to buy now present zero risks, the pertinence is obvious. Yes, gold and crude oil dominate the headlines, given the recent rumblings in the geopolitical realm. However, there’s no more precious resource than water. That’s the real commodity that could cause serious global conflict.
With that in mind, below are a few key water stocks to buy now.
American Water Works (AWK)
Based in Camden, New Jersey, American Water Works (NYSE:AWK), through its subsidiaries, provides water and wastewater services, covering approximately 1,700 communities in 14 states. Nominally, it serves approximately 3.5 million active customers. Further, the customer list covers the full range, from residential, commercial and industrial, among other categories. Since the start of the year, AWK stock lost 12% of its equity value.
To be sure, that’s not a great start. However, with the geopolitical dynamic emphasizing reliable narratives, AWK could start a recovery. Analysts are betting on exactly that, rating shares a consensus Moderate Buy. They’re also seeking on average a price target of $138.43, implying more than a 19% upside. Further, the most optimistic target sees shares hitting $169.
Last fiscal year, the company only missed EPS estimates in the first quarter (by 1 cent). For the current fiscal year, experts anticipate earnings per share of $5.25 on sales of $4.45 billion. That’s a decent improvement of $4.90 EPS on sales of $4.23 billion.
Essential Utilities (WTRG)
Calling Pennsylvania home, Essential Utilities (NYSE:WTRG) operates regulated utilities that provide water, wastewater and natural gas services. Primarily, it offers water services through operating and maintenance contracts with municipal authorities and other parties. In terms of coverage, Essential serves 5.5 million customers, which encompass residential, commercial, industrial and other needs.
Since the start of the year, WTRG lost almost 7% of its market value. Again, that’s not a great way to start the first three-and-a-half months. Nevertheless, WTRG presently features a unanimous Strong Buy view among four analysts. Moreover, the average price target lands at $41.50, implying a 20% upside potential. What’s conspicuous is that the least optimistic view of $40 still implies a significant positive return.
Experts project a solid year in 2024 for the company, forecasting EPS of $1.98 on sales of $2.37 billion. Last year, Essential posted an EPS of $1.86 on sales of $2.05 billion. Therefore, it’s one of the water stocks to buy now on the strong top-line expansion implications.
Consolidated Water (CWCO)
Headquartered in the Cayman Islands, Consolidated Water (NASDAQ:CWCO) designs, constructs, manages and operates water production and water treatment plants primarily in its home market. It also serves the Bahamas and the U.S. The company conducts business through four segments: Retail, Bulk, Services and Manufacturing. While risky, CWCO is particularly intriguing for its relevance to desalination.
Desalination involves converting saltwater into potable (drinkable) water. In 2022, Consolidated made industry news when the Water Authority of the Cayman Islands signed an agreement with the firm to develop a seawater reverse osmosis plant in George Town, Grand Cayman. For full disclosure, CWCO stock has lost 31% of its market value this year. Still, if you want to take a contrarian bet, this idea could be interesting.
Roth MKM’s Gerry Sweeney rated CWCO a Buy with a $38 price target, implying nearly 56% upside potential. Undergirding this forecast is an anticipated EPS of $1.49 on sales of $158.85 million in fiscal 2025. However, fiscal 2024 could see a profit and growth reduction.
The bottom line, CWCO is speculative. Still, if you’re looking for pop in this sector, it could be one of the water stocks to buy now.
On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.