Go with the Flow: Top Water Stock Picks
Investors looking to cash in on water should look to opportunities in the "total water cycle," where companies look to address the global imbalances of the natural resource, Rainer Ottemann, head of fund sales for Germany and Austria at KBC Bank Deutschland, said Monday.
"Water may be the most underestimated resource in comparison to traditional resources, because it has much more significance to humans," Ottemann told "Power Lunch Europe."
Ottemann likes wastewater utilities like Severn Trent and Veolia in Europe, as well as Aqua America .
Investing in infrastructure to improve the regional imbalances in world water is another good way to make money, according to Ottemann.
The UK and U.S. have old pipeline systems that cause water loss over time. Billion-dollar investments will be required in order to renew these systems, Ottemann said.
Pipe maker Wavin, filter and pump system company Pentair and drainage system company Geberit are infrastructure companies Ottemann likes.
Implementation of various water cleaning systems in developing countries like India is also an interesting area, with Calgon Carbon and ITT Industries as attractive possibilities.
Water investments have done very well in relation to the MSCI World stock market index on a 5-year basis, Ottemann said, as the water sector is more "fundamentally defensive."
Weaker economic growth worldwide does not affect water cycle stocks. And the year-to-date market correction in this sector is overdone and does not reflect excellent future prospects based on current valuations, Otteman said.