5 Water Stocks to Watch

Water may not be the buzziest of investment themes, but it’s one of life’s most essential commodities. Here is a collection of stocks to watch for opportunities in the water sector, based on recent news.

• Roper Technologies has increased its annual dividend for the 31st consecutive year.
• Core & Main has acquired a provider of wastewater and storm drainage products.
• Primo Water Corporation has appointed a PepsiCo executive as its new CEO.

Roper Technologies

The Dividend Increase Stock

Roper Technologies [ROP] increased its dividend by 10% for the most recent quarter, marking the 31st consecutive year in which the software company has bumped up its annual dividend. Roper’s products include Neptune smart water meters, which are used to take 72 million readings per month. Neptune revenue was $396m in the third quarter of 2023, up from $360m in the year-ago quarter.

Core & Main

The Acquisition Stock

Core & Main [CNM] announced last month that it had inked a deal to acquire all the assets of Granite Water Works, a provider of water, wastewater and storm drainage products in Minnesota. “Granite Water Works has firmly established itself as a trusted partner to contractors and municipalities in its community,” said Core & Main President Jack Schaller in a statement, adding that Granite’s team brings a “depth of local market knowledge”.

Veralto

The Tender Offer Stock

Veralto [VLTO] recommended on 29 November that shareholders reject a mini tender offer from TRC Capital Investment “because, among other reasons, the offer price is below Veralto’s current share price”. Veralto is the water division of Danaher [DHR] and was spun out earlier this year to allow Danaher to focus on higher-growth and higher-margin businesses. Veralto made its public market debut in early October; the share price is down 2.6% through 5 December, but up 7% in the past month.

Primo Water

The New CEO Stock

Primo Water [PRMW] appointed Robbert Rietbroek as its new CEO in November. Rietbroek is also Vice President of Quaker Foods North America, a division of PepsiCo [PEP], and will help “to build on our momentum as well as to help guide Primo Water’s ongoing transformation into a leading pure-play water company in North America”, Primo Water said in a statement. It also announced last month that it would be selling its international business for $575m.

Watts

The Top Workplace Stock

Watts [WTS] has recently been named by the Boston Globe as a top place to work in the US. The survey measured employee opinions about their employer’s leadership, values, pay and benefits, training and engagement. The news “is a testament to who we are through the lens of our team members and celebrates us as an engaged and people-first organisation,” said CEO, President and Chair Robert J Pagano in a press release.

Another Way to Invest in Water

The First Trust Water ETF

The First Trust Water ETF [FIW] holds all five stocks. As of 4 December, industrials account for 52% of the portfolio, while utilities and healthcare have weightings of 18.9% and 15.7% respectively. Information technology, materials and consumer staples have single-digit allocations. The fund is up 13.9% year-to-date.

The Invesco Water Resources ETF [PHO] holds Core & Main, Roper, Watts, Danaher and Veralto. Machinery and water utilities are the sectors with the largest allocations as of 1 December, representing 24.4% and 12% respectively, while software has an 8.6% weighting. The fund is up 11.9% year-to-date.