By Ronald Y. Perez, WC&P Senior Editor

As small water treatment dealers get caught up in the Christmas spirit, it’s easy to look back on 2000 as a year that brought many changes to the water industry. Whereas all the talk seems to be centered around downsizing, takeovers, mergers and privatization, few have noticed the potential behind investing in water stocks.

And who would know the water industry better than those involved in the day-to-day operations of their own related businesses. While every Wall Street aficionado longs to catch the next “big thing” in the stock market by way of IPOs or stock splits, many water companies have quietly made their investors a pretty penny in recent times.

Of course, if it were just a matter of picking a stock at random and watching it take off, we would all be in Bali with umbrellas in our drinks. No, like anything else, the water industry is a delicate species that often dumbfounds even the most diligent of analysts. Why? The main reason is the industry is broken up into so many sub-groups—municipal, industrial, consumer, technological and even water as a commodity.

That said, water stocks still have done well when compared to other indexes. For example, American Water Works is the largest U.S. water utility and has registered a 20.9 percent annual return in the last 20 years. Over the same time, United Water Resources posted an 18.6 percent return. In comparison, the Dow Jones Industrial Average (17.1 percent) and the Standard and Poor’s Index (16.6 percent) have performed just below the utilities during the same period.

Along with privatization of water utilities, a foreign influence is also gaining in the United Sates. French giants Vivendi and Suez Lyonnaise (remember, Suez acquired United Water Service, which is the second-largest U.S. public water utility) and U.K. conglomerates Severn Trent and Kelda Group are licking their chops to get at an additional 250 million potential customers, according to CBS.MarketWatch.com. This is not to mention Germany’s RWE AG, which acquired Thames Water only recently, and was mentioned as a potential bidder for Vivendi Water when the USFilter/Culligan parent company agreed to acquire Seagrams, approval of which was delayed in October by European authorities.

Now, before we start rushing off to make our millions, let’s keep in mind what’s hot today may be tomorrow’s old news. And though we’re experiencing economic growth and full employment never before seen in our country’s history that doesn’t necessarily translate to all industries and sectors. So, as you gaze forward to 2001 and what investing opportunities look tempting, you may want to use these websites as helpful guides.

www.worldlyinvestor.com
With such an international influence in U.S. water companies lately, it’s only apropos we visit this site first. Beginning on the left hand side of its home page, the site provides stock quotes with designations “delayed quote,” “real time quote” (a free service, it says) and “symbol lookup.”

Just below that you’ll find perhaps the most useful tool in searching for water-related companies—a “site search.” Typing in anything with the word “water” is bound to get you where you want to go. In this instance, I typed in the generic “water companies” and received a story archive dating back to December 1999 including a couple of stories on Vivendi.

Of course, the home page is much more complex than a search function. Home automatically brings you to “industry sectors.” Other tab options available, and visible near the top of the page, include “columnists,” “mutual funds,” “data center,” “regions,” “resources” and “newsletters.” Under industry sectors, categories (alphabetically listed) are broken down this way: “banks,” “biotech & pharmaceuticals,” “computers,” “internet,” “media & entertainment,” “retail,” “software,” and “telecom.” If water doesn’t seem attractive enough, other investing opportunities are at your fingertips.

Overall, the site gives you the basics without graphical fanfare. You have search and stock quote functions on your left, heavy text with recent columns in the middle and current postings for the Dow, Nasdaq and the S&P. If you’re looking for a lot of water industry news, this site may be a bit cumbersome but will lend enough insight to make it worthwhile. Using investor vernacular, I would put a “hold” rating on it.

www.waterinvestments.com
Here, we see a more water-specific site down to the standard light blue background. The major headings on the home page include “news,” “stock reporter,” “executive perspective,” “auditor’s insight,” “water asset exchange” and “links.” Stock reporter gives you an alphabetical listing of different water companies and a resourceful stock guide to boot. Links lets you search for other companies directly.

The “discussion forum” sub-heading to the left of the page proved to be less informative than I expected. One of the topics dealt with water marketing and some of the newer websites related to the subject. The word “forum” was reduced to a footnote. More forums are at your disposal but, judging by the dates and topics listed, seem to be rarely used by the site’s visitors. The designers may want to insert a more interactive component in place of the forum.

In the middle of the page is the most dominant segment—“today’s top news stories.” A news archive feature is also provided. Beneath that you’ll find “today’s top movers,” a list of companies experiencing a surge in their stock value. Paydirt! All stock information is delayed 20 minutes, according to the small print at the bottom.

And in case you’re still lukewarm about diving into any water investments, at the right is a department entitled “why invest in water?” On this particular occasion, 17 publicly traded water companies were profiled. Registration, however, is required to access any information regarding the companies.

Down further to the right, you’ll find a “viewer poll,” which asks visitors to cast their votes on questions about the water industry. Finally, “conference reviews” are quite extensive and provide contact information.
As all of this site’s nuances are unearthed (only a few mentioned here), you can see how this would be a valuable guide in determining what companies, if any, should be taken seriously. It could also serve as a great tracking service over long periods of time. This is definitely a “buy” site.

www.waterfund.net
Last but not least, we provide a website solely devoted to a single, small mutual fund. Based out of Santa Fe, N.M., The Water Fund is the dreamchild of philanthropist Andrea Mellon, who is known to invest her money in socially conscious companies. The site itself is overseen by Avalon Trust Co. It says it all on the home page: “Committed to the power of private enterprise to foster positive social change.”

First, it’s necessary to mention that this site is under construction at the time of this writing so all of the functions may not work properly. Plus, the site is only available in 28 states. The functions include the home page, “investment strategy themes,” “fund information,” “fund report” and “prospectus.” All of them were accessible except the fund report. As you can well imagine, the prospectus reads like War and Peace and will not be covered here.

Five strategy themes are listed: “Water Provision and Management,” “Water Measurement and Control,” “Water Treatment,” “Wastewater Recycling” and “Exotic Technologies.” As an example of why you should consider investing in this valuable natural resource, the site provides the fact that “after water companies were privatized in the eighties, the price of water to consumers doubled and company profits rose 690%.” That sounds impressive initially, but one must remember that companies with a “social conscious” are deemed relevant to the mutual fund.

So what companies are invested through the fund? A list is provided of the fund’s 10 largest holdings under the fund information button. Some of them are Calgon Carbon, Danone, Pall Corp. and Tetra Tech. The 10 listed equal 36 percent of the total fund investment. Return numbers and values are updated on a daily basis and are also shown under this heading.

Overall, it’s an interesting site that potentially raises certain geological and environmental issues in the process. Most investors, however, are in it to win it, so to speak. Still, the top 10 list includes some big names that have healthy portfolios. In addition, considering the volatile nature of the water industry over the last few years, it may be wise to look at a mutual fund to better appropriate funds across a wider range of companies. The bottom line is clear cut: If you want to invest with a conscious, this is a “buy” site. If you’re out to play and win at the market, then put this one under the “for sale” sign.

Conclusion
Whether you’re a believer in water stocks, high-tech stocks or any other type of investing, this much is true—some water companies will be making a lot of stockholders proud before this trend is through and people move on to something else. As with any other industry, the key is finding the right company at the right time.

In addition to more privatization, it’s not a stretch to say that water companies are, in many ways, monopolies. If they were to impose a gigantic increase in water rates, consumers would be virtually powerless to do anything about it. For further proof, look at the oil situation in this country. Now, there’s something to think about when we hear about another merger and subsequently another investment opportunity.


Watering Down Your Choices: Helping to Pick the Right Stocks

www.worldyinvestor.com
Incorporates the world of water through its search function. Real time quotes a bonus feature for those who need information now.

www.waterinvestments.com
The only site reviewed solely devoted to the water industry. More data than the average stock follower could possibly ever need.

www.waterfund.net
The mutual fund with a conscious. It begs the question—what will come first, the completion of the website or its demise?

Others to check:

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