Water is often noted as the “life blood” of the Earth.  By being such an integral part of so many facets of life, it’s not difficult to come up with many examples of how without water our economy would fail.  With water playing such a pivotal role in our everyday lives, does it make sense to include in your portfolio companies that distribute and refine water?

As I discuss water companies, please keep in mind that when I speak of a company being a “water company,” I am including company’s that focus their primary line of business on the extraction, distribution and/or refinement of water.

In today’s market you can make a rudimentary classification of water companies that will place them in either one of two camps (some are doing both).  Water companies are either distributing water or refining water.   Typically the companies that are distributing water are in a unique position in their market(s) in which they are not facing any direct forms of competition.  Therefore, these companies are often value oriented (don’t expect the share price to rise astronomically in the next month), distribute a dividend to their shareholders and historically are less volatile (risky) than the market (SP500).

Conversely, the water treatment/refinement companies I have come across are growth oriented, often do not have a dividend distribution and are comparatively or more volatile than the market.  These companies are growth oriented because they should be.  An ever increasing desire and need for water treatment is present domestically and especially internationally.  Whether it be desalinization or removing contaminants from water, opportunities exist for growth in developed and emerging nations.

With these two distinct divisions, either category might be appropriate for your portfolio.  Here are some companies from both areas to start your research with.  Final note – Shifts in demand and trends can cause value companies to become growth companies.

Water Distribution Companies (Primary Business)

Water Treatment Companies

Happy investing.