How an aging infrastructure all but guarantees this $1 trillion investment slam dunk…
You can do a quick Internet search almost weekly and see the dramatic effects of a crumbling infrastructure in desperate need of an overhaul.
Deep, massive sinkholes opening up in the middle of streets, fields, and even houses – swallowing up everything within their circumferences.
Why just a two weeks ago a sinkhole trapped an SUV in Dekalb County, Georgia, just as driver Diane Simons was on her way to work.
The cause of the hole? A broken water main.
Two months before that, a school was flooded and nearby homes damaged after a similar water main broke in San Francisco.
It’s an all too common scenario throughout America. In fact, there are nearly 240,000 water main breaks per year across our vast country.
According to the US Geological Survey, broken water mains and other leaks led to an estimated 1.7 trillion gallons of fresh, clean water being wasted in 2011.
That’s enough H2O to supply the nation’s ten biggest cities with clean water for an entire year.
The reason why this is happening is simple: the majority of water pipes that crisscross the US are old.
According to data from the American Society of Civil Engineers, most pipelines were installed more than six decades ago, while some pipes running through America’s largest cities are over 100 years old.
But what’s even more shocking is this…
Our water infrastructure is in such dire straits, that the American Water Works Association is giving it a repair price tag of $1 trillion.
And unlike other natural resources like oil or timber, there is no substitute for water. Without water, humans can’t survive. So inevitably, a water infrastructure overhaul has no choice but to happen.
Now if you’re an investor, guess what that means?
That’s right: A trillion dollar pie is going in the oven.
Companies in the water business are now patiently waiting for the government to begin doling out big construction and repair projects.
Although we have yet to hear of any official plans to completely revamp the current systems in place, public pressure is on.
Daily commuters like Diane can only withstand so much temporary fixes to a growing nightmare.
Earlier this year, water infrastructure firm Xylem Inc. (XYL) conducted a survey regarding the public’s take on the state of our water systems.
88% of the people surveyed said that the government should be investing in water infrastructure while 65% said that they would be willing to pay a higher monthly water bill to help cover the repairs.
So the public is willing to spend the money. Now it’s up to our politicians.
Here are a couple companies with excellent water exposure that you’ll want to watch closely:
Xylem is a multinational with the US water market making up about a third of its business. It’s currently hovering near its 52-week high, but any news of agreements or contracts could easily spring the stock for higher gains.
It also offers a nice dividend payment to shareholders. With a recent share price of $27.47, its latest dividend yield was 1.70%.
Northwest Pipe Co. (NWPX) is a Vancouver-based manufacturer of industrial-grade pipes for drinking water systems. It’s a pure play, smallcap stock that saw its profits double in Q1 2013 from the same quarter last year.
According to NWPX, market conditions may slow in the next few quarters, so we could see the stock level off until their next major project. That being said, a new project could come online at any given moment, so keep your eyes peeled.
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