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Water plays seem to me the ultimate story stocks. It's an easy story to understand given our droughts, warming climate, and probable competition for a valuable resource; however, the 4 ETFs (PHO +51%; CGW +73%; PIO +52%; and FIW (65%) investing in the water theme have all underperformed SPY (+91%) over the last five years. Granted, several of the holdings of the funds are foreign stocks which have underperformed as a group during that time period. I lost money on Flexible Solutions (FSI), maybe the ultimate sucker's story stock: the company has a product that sits on the surface of reservoirs or swimming pools and retards evaporation. Good stories don't always translate into good returns. Maybe water stocks will have their day in the sun, if the metaphor doesn't pain you.
I have gone with ECL (Ecolab) and Danaher (DHR), both of which are diversified companies that have some exposure to water. Bill Gates owns over 10% of the former and the latter is breaking up (likely next year.)
I have considered water rights plays, but unfortunately there's really not a pure play in that regard. Nestle does have water rights, infamously. Limonera (LMNR) and JG Boswell (BWEL) also sit on water rights.
The Barron's article on ECL in February was very positive and there was a nice entry point at that time. Good choice. I'll check out DHR.
Thanks.
Ecolab works for me for a play on water (they said in the last CC that they were seeing benefit from helping customers with the drought situation in California), but I think the core sanitation/hygiene business is highly appealing as I tend to look for businesses that provide/serve a need. It is a dividend aristocrat.
As for Danaher, I think this article provides a very detailed history and background:
Argent Capital Management News & Commentaries /Favorable Odds Weekly Investor February-17-2015/ Danaher Corp. (DHR), headquartered in Washington, D.C., is a designer, manufacturer and marketer of medical, industrial, professional and consumer products. DHR was founded in 1969 and was previously known as DMG, Inc., but later took the Danaher name in 1984. The company produces a broad range of products including electronic calibration equipment, retail/commercial petroleum products such as underground storage tank leak detection systems, high-precision optical systems for the analysis of microstructures and aerospace defense articles, among others. DHR’s primary product lines are sold in North America, Europe and Asia.
DHR has a long history of delivering consistent earnings growth through continual development of its own businesses and by acquiring businesses that are fast growing and have high returns. Over the years, the company’s management team has demonstrated skill and discipline in selecting and integrating its many purchases. A more recent purchase included an expansion in the water treatment industry. This industry has strong growth potential and now DHR is a key beneficiary of this trend. Economic uncertainties have depressed DHR’s multiples, and as a result we have been presented with this buying opportunity. In the long-term, we expect DHR to outperform its peers and the market. http://argentcapital.com/weeklyinvestor/weekly-investor-february-17-2015/
Recent: This newsletter presents selected recommendations from portfolio managers of Argent Capital Management LLC Electronic Arts, Inc. 5.7% Google, Inc. 5.0% Skyworks Solutions 4.4% Teva Pharmaceutical 4.3% CBS Corporation 3.9% Broadcom Corporation 3.9% Danaher Corp. 3.8% ON Semiconductors 3.7% Post Holdings, Inc. 3.6% Lincoln National 3.6% Opinions reflect the portfolio manager’s judgment on the date above and are subject to change. A list of stocks recommended by Argent is available upon request. You should not assume that these recommendations are or will be profitable. In the course of it’s business, Argent’s client accounts may be buying and selling these stocks. http://argentcapital.com/weeklyinvestor/weekly-investor-may-18-2015/
Comments
I have considered water rights plays, but unfortunately there's really not a pure play in that regard. Nestle does have water rights, infamously. Limonera (LMNR) and JG Boswell (BWEL) also sit on water rights.
Ecolab works for me for a play on water (they said in the last CC that they were seeing benefit from helping customers with the drought situation in California), but I think the core sanitation/hygiene business is highly appealing as I tend to look for businesses that provide/serve a need. It is a dividend aristocrat.
As for Danaher, I think this article provides a very detailed history and background:
http://www.bloomberg.com/bw/stories/2007-02-18/a-dynamo-called-danaher
Also interesting:
http://www.bloomberg.com/news/videos/b/e0c5cdaa-c493-4d8e-818f-8d9f7701cc8c
/Favorable Odds
Weekly Investor February-17-2015/
Danaher Corp. (DHR), headquartered in Washington, D.C., is a designer, manufacturer and marketer of medical, industrial, professional and consumer products. DHR was founded in 1969 and was previously known as DMG, Inc., but later took the Danaher name in 1984. The company produces a broad range of products including electronic calibration equipment, retail/commercial petroleum products such as underground storage tank leak detection systems, high-precision optical systems for the analysis of microstructures and aerospace defense articles, among others. DHR’s primary product lines are sold in North America, Europe and Asia.
DHR has a long history of delivering consistent earnings growth through continual development of its own businesses and by acquiring businesses that are fast growing and have high returns. Over the years, the company’s management team has demonstrated skill and discipline in selecting and integrating its many purchases. A more recent purchase included an expansion in the water treatment industry. This industry has strong growth potential and now DHR is a key beneficiary of this trend. Economic uncertainties have depressed DHR’s multiples, and as a result we have been presented with this buying opportunity. In the long-term, we expect DHR to outperform its peers and the market.
http://argentcapital.com/weeklyinvestor/weekly-investor-february-17-2015/
Recent: This newsletter presents selected recommendations from portfolio managers of Argent Capital Management LLC
Electronic Arts, Inc. 5.7%
Google, Inc. 5.0%
Skyworks Solutions 4.4%
Teva Pharmaceutical 4.3%
CBS Corporation 3.9%
Broadcom Corporation 3.9%
Danaher Corp. 3.8%
ON Semiconductors 3.7%
Post Holdings, Inc. 3.6%
Lincoln National 3.6%
Opinions reflect the portfolio manager’s judgment on the date above and are subject to change. A list of stocks recommended by Argent is available upon request. You should not assume that these recommendations are or will be profitable. In the course of it’s business, Argent’s client accounts may be buying and selling these stocks.
http://argentcapital.com/weeklyinvestor/weekly-investor-may-18-2015/