8 Water Stocks To Follow In 2020
This year the stock market and our portfolio of water stocks increased substantially. The best performers in the portfolio improved by around 30%, and not one experienced a loss. This series of articles dates back to 2012 intending to increase awareness of water scarcity, potentially raise capital for water infrastructure and provide an opportunity to do more than just complain about rising water prices. We have been following a portfolio of stocks and ETFs for nine years now.
Year to date, the Dow Jones Industrial Average is up over 20%. The Nasdaq is up 30% and the Standard and Poor’s 500 is up 25%. These same indexes were all down last year. Let’s take a look at how the companies (associated with water) identified in January 2012 performed.
American Water Works Co. Inc. (NYSE: AWK)
This stock was up 35% in 2019 after an increase of 4% last year. This stock is up 70% over the previous three years and 134% over the past five years and was a $25 stock in 2011. I’m not sure where we could have found such good gains in the past nine years in such a conservative industry. American Water Works provides water and wastewater services to 15 million people in 30 U.S. states and parts of Canada.
Aqua America Inc. (NYSE: WTR)
Aqua American is up 32% this year and up 56% in the last three years. Aqua America is a holding company for a group of regulated utilities serving 3 million customers in 13 states ranging from Texas to Maine. This stock has returned around 72% for the past five years outperforming the Dow Jones Industrial Average, which saw gains of about 50% during this same time.
California Water Service Group (NYSE: CWT)
This water company is a utility serving California, Washington, New Mexico, and Hawaii, and American States Water Co. Year to date 2019 California Water Service Group is up almost 9%. For the last five years, the stock is up 112%. A vast majority of their revenue comes from states hit hard with drought.
American States Water Company (NYSE: AWR)
This California-based utility provides water, electric, and contracted services in the United States. In 2019 it saw gains of 29%. During the past five years, this stock is up 150% and been a solid performer over the last eight years and is diversified across the United States. It has been the best performing stock in the portfolio.
Exchange-Traded Funds or ETFs
Another option to invest in water is Exchange Traded Funds (ETF). Think of an exchange-traded fund as a mutual fund that trades on a public exchange, like the New York Stock Exchange. You get the diversification of a fund with the added benefit of the liquidity of a public exchange.
In 2019 the performance of ETFs for water was much better than the previous year. Below is the past performance of a few of the popular water ETFs we have been following:
PowerShares Global Water Portfolio (PIO)
This ETF is based on the Palisades Global Water Index. It focuses on companies providing potable water. This year the ETF is up 29%. It is also up 30% for the last five years.
PowerShares Water Resources Portfolio (PHO)
The largest Water ETF with more than $1 billion in assets. It also invests in companies providing potable water. In 2019 it is up 34% and increased by 46% the last five years.
Guggenheim S&P Global Water Index ETF (CGW)
This ETF corresponds to the S&P Global Water Index. This ETF is the first U.S. listed global Water ETF. It is up 30% in 2019 and up 44% in the last five years.
As you can see, 2019 was a healthy year for the stock market, and several of the water stocks did exceptionally well.
Please do not take any of the information on this post as a recommendation to buy the stocks or ETFs. This is simply an attempt to start a meaningful conversation on the blog about investing in water. What do you think is in store for the stock market and water stocks in 2020? If you enjoyed this article, please consider subscribing or following me on twitter @H2oTrends.