The 3 Best Water Stocks to Buy Now: February 2024

Stocks to buy

Looking to add some water stocks to your portfolio?

Water is essential for life, yet climate change threatens and disrupts its supply. As droughts become more frequent and extreme weather events strain resources, demand for water technology will surge. Companies at the forefront of water treatment, distribution, and efficiency benefit enormously from this demand. As an investor, you should realize that companies focused on water solutions offer a promising investment opportunity. We’ve highlighted the top three water stocks set to rake in profits as the market demand increases.

Xylem Inc. (XYL)

xylem app

Source: IgorGolovniov / Shutterstock.com

Xylem Inc. (NYSE:XYL) is a company that manufactures and services engineered products and solutions for water and wastewater applications worldwide. The company operates through three segments: Water Infrastructure, Applied Water, and Measurement & Control Solutions. The Water Infrastructure segment provides pumps, controls, filtration equipment, and mobile dewatering for transporting water. The Applied Water segment offers pumps, valves, heat exchangers, and dispensing equipment for different applications. Finally, the Measurement & Control Solutions segment provides smart meters, communication devices, analytics, and more. 

Xylem has recently agreed to a three-year contract with Publiacqua in Tuscany, Italy, to improve the efficiency of Medio Valdarno’s water infrastructure. The contract aims to enable a more proactive response to varying regional water demands through technologies such as meter data analytics and real-time leak detection. 

XYL reported strong growth across key metrics in its third-quarter financial report. Revenue reached $2.076 billion, up from $1.38 billion or 50.72% YoY. Net income was $152 million, a significant 1,166.67% increase from $12 million YoY. Xylem expects revenue of approximately $7.3 billion for the full-year guidance, up 2% from prior guidance. It also expects organic revenue growth of 11%, up from 9-10%. Meanwhile, analysts rate the stock a “Strong Buy” with a high estimate of $140, representing over 24% upside potential from current levels, making it a great candidate for some of the best water stocks right now.

Primo Water Corporation (PRMW)

Lots of water bottles. Bottles with blue caps.

Source: DenisProduction.com / Shutterstock.com

Primo Water Corporation (NYSE:PRMW) is a company that provides bottled water and water dispensers for residential and business customers. The company offers various bottled water products under brands like Primo, Crystal Rock, Deep Rock, and Sparkletts, including spring, mineral, sparkling, and flavored water. Primo also provides water dispensers, self-service refill stations, and filtration equipment. The company sells its products at retail and online at different price points.

Primo Water Corporation has recently completed the sale of a large part of its international operations, excluding the UK, Portugal, and Israel, for $575 million in an all-cash deal. The remaining international businesses are expected to be divested later in 2024. This transaction allows the company to concentrate on growing its core North American water business. 

PRMW reported strong third-quarter results with revenue of $622 million, which increased by 6% YoY. Adjusted EBITDA also grew 21% to $141 million, exceeding the high-end value of its prior guidance. Net income increased from $1 million to $33 million on higher operating income and lower expenses. Meanwhile, the company increased its full-year free cash flow guidance by $10 million to around $160 million. Moreover, analysts have a “Strong Buy” rating on the stock with a high price target of $23, representing over 55% upside potential from current levels.

Pentair PLC (PNR)

In this photo illustration the Pentair (PNR) logo seen displayed on a smartphone

Source: rafapress / Shutterstock.com

Pentair PLC (NYSE:PNR) is a global water solutions company with three business segments: Pool, Water Solutions, and Industrial & Flow Technologies. It manufactures a wide range of residential and commercial pool equipment, water treatment products, pumps, valves, and other application fluid handling technologies, including pools, water filtration, drinking water, wastewater treatment, irrigation, food and beverage processing, and fire suppression. Pentair sells its products under brands like Sta-Rite, Everpure, RainSoft, and others.

In its third-quarter financial report, PNR announced sales of $1 billion, a slight 4% decrease YoY. On the brighter side, operating income increased 22% to $180 million, reflecting a return on sales of 17.9%, up 400 basis points. Meanwhile, net income increased by 14.47%, from $115.40 million to $132.10 million. The company also generated $162 million in net cash from operating activities of continuing operations, a $67 million increase. Analysts are so confident with Pentair that they rated it a “Strong Buy” with a high estimate of $83, which reflects an upside potential of over 14%. This makes an excellent case for adding it to your water stocks to buy list.

On the date of publication, Rick Orford did not have (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.

Rick Orford is a Wall Street Journal best-selling author, investor, influencer, and mentor. His work has appeared in the most authoritative publications, including Good Morning America, Washington Post, Yahoo Finance, MSN, Business Insider, NBC, FOX, CBS, and ABC News.

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