Fundamentally, the case for the best water stocks to buy couldn’t be any clearer: water is the most precious resource. Life on earth can’t exist without it. So, it’s essential that we’re good stewards with its management and distribution.
Yes, as with any incredibly valuable commodity, you can take the narrative to its extreme end. As geopolitical experts have pointed out, the next major conflict may be over water access and rights. In fact, conflicts have already risen because of the global water shortage crisis.
However, on a more practical level, the necessity of proper stewardship means that the sector represents perhaps the ultimate in defensive investments. That’s a positive heading into market uncertainty. On that note, keep an eye on these best water stocks to buy.
American Water Works (AWK)
A great starting point for the best water stocks to buy, American Water Works (NYSE:AWK) provides water and wastewater services in the U.S. Per its public profile, the company provides these solutions to approximately 1,700 communities in 14 states. This coverage map includes approximately 3.5 million active customers. It serves the full range of clients, including residential, commercial and industrial.
Now, it’s important to set expectations for AWK stock: it’s not something to get rich on. For example, during the past four quarters since the first quarter of 2024, the average positive earnings surprise came out to 2.85%. It gets the job done – nothing more, nothing less.
For fiscal 2024, covering experts believe earnings per share will land at $5.24 on revenue of $4.45 billion. By the following year, EPS could rise to $5.68 on sales of $4.75 billion. In 2023, American Water posted earnings of $4.90 on revenue of $4.23 billion.
As a bonus, AWK offers a forward annual dividend yield of 2.28%. It’s a reliable workhorse, making it one of the best water stocks to buy.
Veolia (VEOEY)
Diving into the over-the-counter market, Veolia (OTCMKTS:VEOEY) is based in Paris, France. Per its corporate profile, the company designs and provides water, waste and energy management solutions worldwide. While it may be best known for its traditional resource management services, Veolia intrigues forward-thinking investors thanks to its desalination technologies.
Converting seawater into potable (drinking) water, desalination may be one of the most important innovations moving forward. To be sure, the process itself tends to be economically onerous. According to CNBC, a desalination plant in San Diego, California requires about 35 megawatts of electricity to operate. Therefore, the innovation will more than likely require advancements in energy infrastructure.
However, those advancements are coming in the form of renewables and other mechanisms. Granted, it’s a risky idea which is why VEOEY has only gained less than 4% in the trailing 52 weeks.
Nevertheless, Veolia is attractive because it trades at only 13.93X forward earnings and a subterranean 0.47X trailing-year revenue. With a unanimous bullish rating, VEOEY makes a case for best water stocks to buy.
Essential Utilities (WTRG)
Based in Bryn Mawr, Pennsylvania, Essential Utilities (NYSE:WTRG) operates regulated utilities that provide water, wastewater and natural gas services in the domestic market. Per its corporate profile, Essential operates through two segments: Regulated Water and Regulated Natural Gas. For the former business unit, the company’s coverage map encompasses 5.5 million clients. These include residential, commercial and industrial customers, among other categories.
To be fair, WTRG may be the most exciting idea among the best water stocks to buy. That’s based on both a good and not-so-pleasant context. Getting the bad news out of the way first, WTRG stock fell almost 9% in the past 52 weeks. Over the past five years, shares have hardly budged, gaining less than half-a-percent.
On the positive side, analysts anticipate steady top-and-bottom-line expansion. For fiscal 2024, EPS could rise to $2.03 on sales of $2.2 billion. Last year, the company posted earnings of $1.86 on sales of $2.05 billion.
Finally, analysts rate WTRG as a unanimous strong buy with a $41.50 price target. It’s an idea to keep on your radar.
On the date of publication, Josh Enomoto 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.
