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Invest in Water: A Special Situations Report on Our Most Precious Resource . The Rude Awakening delivers a daily diet of worthwhile investment insights, presented in the context of important financial market facts…and Wall Street fictions. To ensure you receive your own FREE subscription to The Rude Awakening, enter your email address below… Invest in Water: An Overview Dirty water is a worldwide tragedy. Clean water is a worldwide investment opportunity. Half of all hospital beds in the world are occupied by someone suffering from a water-related illness. In the developing nations, 80% of all diseases stem from consumption of and exposure to, unsafe water. There is no shortage of water on this big orb of ours, but there is an acute shortage of CLEAN water…and the human toll is alarming. Contaminated water is deadlier than any other evil on earth; deadlier than AIDS; deadlier than cancer; deadlier than contagious diseases; deadlier even than World Wars. During the Second World War, one soldier died every 5 seconds. Today, one human being dies every 3.5 seconds from drinking contaminated water. The scale of this ongoing international tragedy boggles the mind. More than a third of the earth's population lacks access to effective sanitation, which is why more than a billion people contract water-related diseases every year. The UN estimates that in less than 25 years, if present water consumption trends continue, 5 billion people will be living in areas where it will be impossible - or nearly impossible - to meet basic water needs for sanitation, cooking and drinking. But present trends simply cannot continue. The human toll is already horrifying, and the economic toll is rising rapidly. Although 70% of the world's surface is covered by water, only 2.5% of it is potable, and most of that is trapped in the polar ice caps. According to the World Health Organization, less than 1% of the world's freshwater, or 0.007% of all the water on Earth, is readily available for human consumption. Pollution and water-supply abuse are rapidly reducing these precious supplies. Then, of course, there is the dilemma posed by the uneven distribution of this increasingly scarce lifeblood. The problem is; there's no substitute for fresh water. "Water is the most basic and necessary commodity," observes Summit Global Management, "and it is the only element in the world that has no substitute at any price. One can substitute wheat for oats, coal for natural gas, corn oil for soybean oil and hydro-electricity for fossil-fuel generated power, but…water has no substitute regardless of price, the only element in the world of which this is true: This most fundaments of facts is another key to the inexorable and intractable demand for water that will not abate with time." Without question, therefore, clean water is the earth's most precious resource. But this essential truth has not prevented decades of water mismanagement. Throughout the world, clean water is under appreciated and woefully abused…except by the billions of people who struggle to find it each day…or die trying. Only 20% of the world's population currently enjoys the benefits of running water. The other 80% have to find it whenever and wherever they can. In some parts of the world, people spend as much as six hours a day fetching water. Invest in Water: The Big Bucks Clearly, therefore, individuals who invest in water are investing in a certain future. That's why companies like General Electric are getting involved in a big way. GE has gone on a shopping spree for water-focused companies, in the process amassing an impressive portfolio of clean water products and technologies. These water operations are part of GE's new push into environmentally friendly product offerings. Sales of GE's "green" products last year jumped 63% to $10 billion, while orders doubled. Unfortunately, from the standpoint of an individual investor, GE's green products contribute less than 6% of the company's revenues. Water products contribute less than 2%. In other words, GE may do great things for the world's water supply, but its stock might not do much for water-focused investors. Fortune Magazine predicts: "Water promises to be to the 21st century what oil was to the 20th century: the precious commodity that determines the wealth of nations." Water might also be the precious commodity that determines the wealth of investment portfolios. That's why we conducted an intensive, months-long research effort to find the very best ways to invest in water. Our just-released water report highlights five stocks that we believe reward investors over the years ahead. Read on here for your free special situations Water Report Here in the U.S., investing in water infrastructure offers a very exciting long-term opportunity. The average New Yorker buys a new toothbrush every three months, but he brushes his teeth with water that flows through 100-year old tunnels and pipes. The water infrastructure in most of the rest of the nation isn't much newer than Manhattan's. It should be no surprise, therefore, that water pipes are rusting and crumbling all across this great land of ours. The nation's alarmingly decrepit water infrastructure will require a $1 trillion overhaul over the next twenty years, according to the American Society of Civil Engineers (ASCE). This massive infrastructure spending will mean big business for many water infrastructure companies. "America's crumbling infrastructure is eroding our quality of life," the Midwest Contractor warns. "In its 2005 Report Card for America's Infrastructure, the American Society of Civil Engineers ASCE assigned a cumulative D grade to the nation's infrastructure, saying that the condition of roads, bridges, drinking water systems, and other public works have shown little to no improvement since ASCE graded them a D-plus in 2001. Grades in all the categories range from a high of C-plus for solid waste to a low of D-minus for drinking water, navigable waterways and wastewater." America's "D-" water systems would probably receive a passing grade in most parts of the world, but they are still very far from an "A." According to the EPA, the nation's 55,000 community drinking water systems and 16,000 wastewater treatment systems face "staggering public investment needs" over the next 20 years. Repairing the nation's water-supply infrastructure will cost hundreds of billions of dollars over the next two decades. That's bad news for the municipalities, tax-payers and rate-payers that will have to foot the bill, but very good news for the companies that will be sending the bills. Enter companies like Aqua America (NYSE: WTR), Northwest Pipe (Nasdaq: NWPX), Mueller Water Products (NYSE: MWA) and PW Eagle Inc. (Nasdaq: PWEI). The EPA's new dispensations would require many municipalities to make improvements that they cannot afford. Thanks to this assist from the EPA, therefore, Aqua America is finding itself in a buyer's market for municipal water systems. Meanwhile, companies like Mueller Water Products are capitalizing upon a much more rudimentary problem: many water pipes and valves are simply too old to do the job effectively. According to the EPA, nearly 25% of the nation's water pipes are "poor, very poor or elapsed." Even worse, the EPA expects that percentage to increase to 45% by 2020…unless something is done about it. "Many systems have reached the end of their useful design lives," the ASCE reports. "Older systems are plagued by chronic overflows during major rain storms and heavy snowmelt and, intentionally or not, are bringing about the discharge of raw sewage into U.S. surface waters. The U.S. Environmental Protection Agency (EPA) estimated in August 2004 that the volume of combined sewer overflows (CSOs) discharged nationwide is 850 billion gallons per year…If the nation fails to meet the investment needs of the next 20 years, it risks reversing the public health, environmental, and economic gains of the past three decades." Mueller hopes its pipes and valves will provide a major part of the solution. Mueller only started trading as a public company on May 26th. But most of us - and most of our dogs - have known this company from birth. It manufactures about half of all the fire hydrants in the country. Mueller's stock, which sells for about 27 times earnings, is hardly cheap. But all major U.S. water stocks command a premium valuation. We have no idea if these water stocks are worth their premium pricing. But we have some idea that business will be booming for a very long time in the U.S. water infrastructure industry. In addition to these specific recommendations, a brand new exchange-traded fund (ETF) enables investors to invest in water by buying a basket of water-focused stocks. Invest in Water: The PowerShares Play (PHO) It's called the PowerShares Water Resources Portfolio (PHO). According to the prospectus, "The index seeks to identify a group of companies that focus on the provision of potable water, the treatment of water, and the technology and service that are directly related to water consumption." PHO holds 30 positions that provide broad exposure to all facets of the U.S. water industry. Several companies in the fund also operate outside the U.S. But most operate here in the States. If there's a downside to the diversification, it's that you'll end up owning small pieces of stocks that seem only peripherally related to the water theme. For example, General Electric (GE) makes up 0.85% of the index. But a full slate of water utilities are also included among the holdings, with other water treatment and service companies rounding out the rest of it. For the simplest way to invest in water in the U.S., this is it. Are you enjoying this special investment report? Be sure to take advantage of our FREE e-letter commentary by signing up for one or more of these daily financial newsletters: Free Daily Newsletters from Agora Publishing Invest in Water: The Thirsty Dragon No country has a more acute water problem than China… With over a fifth of the world's total population sharing only 7% of the fresh water on earth, it is no wonder China has been listed by the United Nations as one of the 13 countries with the lowest water per capita in the world. But scarcity is just the beginning of China's water problems. Most of the country's waters are so polluted they cannot support aquatic life, much less human life. Half of China's population consumes drinking water contaminated with animal and human waste that exceeds permissible levels…which is why China has the highest liver and stomach cancer death rates in the world. Clean water, therefore, is the ultimate China play. But clean water is also the ultimate world play. No economy can flourish for long by polluting the water that sustains its workforce. Now that unclean water has become a serious ECONOMIC issue in many developing nations, government agencies and private corporations worldwide are springing into action. Indeed, every populous country in the world will be spending billions of dollars - if not trillions - over the next 20 years to install and upgrade its water and wastewater infrastructure. The U.S., alone, will spend $1 trillion over the next two decades to upgrade its decrepit water infrastructure. There are few industrial countries in the world feeling that scarcity more acutely than China. Its water needs are more critical than its much ballyhooed power needs. I did not fully appreciate this until I visited China myself and talked to Chinese business people. Even Chinese officials - prone to covering up or understating the extent of problems - sound alarmist when it comes to water. One official recently said China's problem is "more serious and urgent than [in] any other country in the world." China's rapid industrialization has outpaced its water infrastructure, which is on the verge of collapse. As Minister of Water Resources Wang Shucheng noted, "The price of China's economic boom is being paid in water." Two-thirds of China's 600 largest cities don't have enough water; half of these cities have polluted groundwater. Less than 15% of China's population has safe drinking water from tap. The recent spill in the Songhua River, widely covered in the media, only worsens the problem. For further perspective, consider this: China has about as much water as Canada, but a population 40 times as large. On a per capita basis, China's water reserves are only about one-quarter of the global average. Worse, the distribution of people and water creates its own logistical obstacles. Nearly half of China's population resides in the northeastern provinces, where only 14% of the water resources are located. These facts provide endless challenges for the Chinese. Water shortages are a serious threat to China's booming economy. It costs billions each year in lost output. Plus, water efficiency in China is way behind that of developed countries. As Dickerson says, for an equivalent amount of work, "China uses approximately 7-15 times more water than do developed countries, and with usable water supplies steadily diminishing, will not their competitive position also begin to erode?" The Christian Science Monitor in December 2004 contained a provocative article suggesting that we could see a cartel of water-exporting countries emerge over the next decade, in a style not unlike the Organization of Petroleum Exporting Countries. "Water is blue gold; it's terribly precious," Maude Barlow, chairwoman of the Council of Canadians, told the Monitor, "Not too far in the future, we're going to see a move to surround and commodify the world's fresh water. Just as they've divvied up the world's oil, in the coming century, there's going to be a grab." Whether or not you choose to believe Barlow, it is clear that the demand for clean water is real. In an attempt to avert crisis, China plans to spend $125 billion over the next five years to build hundreds of new water treatment plants. That will only be the beginning of the hundreds of billions it will need to spend, if it hopes to ever provide clean water to most of its citizens. Invest in Water: Our Free Report If you would like to learn more about the best ways to invest in water, take a look at newly released free report. Investing in Water - A Special Situations Report SummitGlobal: Up to date research on the water crisis and investment highlights for forward thinking investors. Yahoo! Finance - Get stock quotes, market news, mortgage rates …At Yahoo! Finance, you get free stock quotes, up to date news, portfolio management resources, international market data, message boards, and mortgage rates NASDAQ Trader - NASDAQ Ten Most Active Share Volume. Latest Trading Halts. Visit The Rude Awakening Archives and you can search over 2000 unique investment Issues & Articles.
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Invest in Water: Infrastructure Plays
Aqua America, for its part, is busily buying up municipal water systems in 13 different states, and spending millions to bring them into compliance with stringent new EPA guidelines. Even if some municipalities would be content to tolerate an excess of arsenic in the local water supply, the EPA is not.
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