Quote of the Day
"The energy bill will help us expand our use of the one energy source that is completely domestic, plentiful in quantity, environmentally friendly and able to generate massive amounts of electricity and that’s nuclear power,"
— George Bush
Dear Wealth Daily reader:
The summer Solstice has arrived… the longest day of the year in the northern hemisphere. And with it, water usage spikes.
So it’s a good time to consider the water market in general-now, while the livin’ is easy.
As you know, I’m a big believer in water as the growth industry for the next generation.
The premise is simple. Water use is skyrocketing. Water supply is dwindling. Or, at best, supply remains static.
And, as hundreds of millions of people across the world rise from poverty, the need for pure, clean drinking water will only grow. In fact, water usage has outpaced population growth for decades now.
The entire publicly-traded sector, every company, is worth around $4 billion. Google, on the other hand, has a market value of $80 billion.
At the same time, water stocks have consistently outperformed just about every major index out there-for the past 20 years.
It’s really been a stealth bull market. That’s because water is only followed by a very small group in the financial world.
No one else really knows the sector exists.
But it does, all right. And we’re going to see huge amounts of money flow into the sector in the years ahead.
Just in terms of utilities, water transportation and treatment, we’re talking a massive amount of money in the coming years.
Check out the figures just for the US:
The EPA calculates $1 trillion will be needed by 2019 to operate and maintain these water utility systems. Break down the numbers, and the opportunity becomes clear…
There’s a $270 billion shortfall for sewer system maintenance
There’s a $263 billion shortfall for drinking water maintenance
That’s $533 billion just to maintain our water infrastructure system. Any improvements or upgrades, and that figure doubles.
Given the cash-strapped state of most municipalities, they’re not equipped to meet the challenge of helping local water systems make the necessary improvements.
Small water systems simply aren’t large enough (or sufficiently capitalized) to pay the cost of upgrading their pipes, expanding their necessary water treatment facilities, and complying with the ever-increasing regulatory standards.
But someone has to pay for the upgrades, because the trickle-down effect of further neglect is catastrophic.
And that, in brief, is why we’ll see water continue to outperform all the major indices. Of course, when taken on a global scale, the premise for investing in water becomes even more compelling.
So far my readers and I have had consistent success in the sector. Some companies, however, have yet to really experience dramatic gains. And as a result, there are several excellent plays in water right now.
It’s about as safe, and certain, as you can get these days.
Oh, and speaking of the global water scene, UNICEF and Procter $ Gamble just announced an alliance created solely to provide safe drinking water for millions of families and schoolchildren.
The focus of the alliance will be providing home-based water purification, to ease the burden on millions of families who currently struggle to access safe water.
From the press release:
UNICEF and P&G will initially be working together in eight countries — Haiti, Mozambique, Ethiopia, Bangladesh, Vietnam, Uganda, Kenya and Pakistan. Joint projects will focus on three main areas: supporting UNICEF’s drive to bring safe water to schools, helping families in emergency situations, and reducing household exposure to arsenic-contaminated water.
One of the innovative tools the partnership will provide is PUR® Purifier of Water — a simple, cost-effective home-based water purification system. PUR removes dirt and disease-causing pathogens from drinking water within minutes, making it ideal for use by families in developing countries. P & G provides PUR at cost for humanitarian uses through the organization’s philanthropy program: Children’s Safe Drinking Water.
Unsafe drinking water exacts a heavy toll on children worldwide; 1.6 million children under five die every year from simple diarrhea, a water-borne affliction. Home-based water purification systems have been shown to drastically cut diarrhea deaths.
"Millions of lives can be saved or transformed with simple, inexpensive and proven tools like household water purification," says UNICEF’s Chief of Water, Environment and Sanitation, Vanessa Tobin. "And our experience using PUR sachets in the wake of the tsunami suggests it could be a particularly valuable relief tool during emergencies."
UNICEF will work together with P & G and other local partners to bring safe drinking water within easy reach of the families that need it. The partnership will also help families learn the simple steps to use water purification systems at home.
"This is a great example of how combining resources of the public and private sectors can bring innovative new technologies to more children than ever," said Greg Allgood, Director of P & G’s Children’s Safe Drinking Water program.
The PUR Purifier of Water technology was developed in cooperation with the U.S Centers for Disease Control and Prevention (CDC) and has been shown to reduce significantly diarrhoeal illness in the developing world.
If you really look, you’ll see lots of alliances, investments and efforts to provide fresh water for the third world in the news. You’re probably already familiar with the World Economic Forum’s Water initiative, which is designed to raise awareness and funds necessary to provide fresh drinking water to the developing world.
Or the UN water initiative. Or dozens of other similar programs.
All of this amounts to an incredible opportunity for safe, consistent growth in the private companies that will provide the expertise, and ultimately the final product-clean, pure water-to those who need it most.
As investors, we’ll benefit along side these companies.
Regular readers know I’m a big fan of water, organics & natural foods and medicines and energy and resources in general. These are the commodities for the next generation.
PS: You may have noticed that today’s quote had nothing to do with the body of this issue of Wealth Daily.
But I included it because I’m a fan of nuclear power, and more to the point, uranium. We’re seeing a major turning point in the energy market, although no real effect will be felt for years.
I’ll have more on nuclear power, uranium and energy in particular in future issues of WD.