Water as an Investing Thesis

Americans in particular use a lot of water. In Canada we are blessed with the Great Lakes and it also benefits many of the northern States, but much of the world is not so blessed. Consider that it takes:

  • 667,000 gallons to grow an acre of corn, and it is a primary source for much of our food we take for granted.
  • 2,400 gallons to raise one pound of meat, think about that next time you sit down to a big steak dinner.
  • 1,800 gallons to grow enough cotton to make one pair of jeans, I bet teenagers never give that a thought.
  • 1,500 gallons to make one barrel of beer, and that takes very high quality potable water.
  • 53 gallons to make one latte, again, with most people this never crosses their mind. 

The average American household uses 400 gallons of water a day or 146,000 gallons per year,. and the above statistics are only a few examples

 
With less than 2% of the worlds water being potable, and the high levels of pollution even in the oceans, and the many demands for increasing water usage, there has to be a strong investment angle in a number of sectors. Desalination is a partial solution, but very expensive.
 
I would like to invite all Pinnacle Digest readers to weigh in on investment angles relating to water so we can as investors be ahead of the trend for increasing DEMAND, always a good angle for profits. What drew my attention to this sector is several things; 1) the deplorable pollution in China and the urgent need for potable water in Africa.
 
2) Recent new techniques in "fracking" with water flooding of thousands of oil and gas wells being drilled is also increasing demand as well as spinning off the need for storage, trucking, cleaning, waste disposal, it is a broad field of investment possibilities. I have several companies to consider I will post at a later date when I see what others offer up.
 
3) With growing, even burgeoning populations in some countries the increased demand for food production is also limited by available water for irrigation, in fact in some countries wars have broken out over usage of rivers and lakes supplying vital resources to more than one country. Even in the U.S. states are fighting over the diminishing supply from the Colorado river for example, and many more such situations could be cited, there is in fact a crisis looming as illustrated by the recent drought conditions in the mid-west which actually was also serious here in Southern Ontario where I lost about half of several garden crops due to a total lack of rain in July, and had to spend 3-4 hrs a day with a garden hose to save the rest.  In fact, unless we receive "rain in due season" which means virtually weekly during the entire growing season, crop yields of any kind are seriously diminished in both quantity and quality. 
 
Some analysts are suggesting that WATER could well become our next vital resource at risk that could impact the lives of millions,  what do you think about this?
 

Community Talk

Re: Water as an Investing Thesis

According to the World Health Organization, 780 million people still lacked safe drinking water in 2010 which indicates a lucrative market for cost effective water technology to meet various needs in a modern society. As a starter for research to meet this need there is a company out of Vancouver that has developed an innovative solar powered water purification system that has already received strong acceptance in Angola and their marketing efforts will no doubt be quite successful in other 3rd world countries as the units can be helicoptered into remote areas where potable water is not available for various reasons. Even here in Canada we have our water problems, in particular the shameful condition of many Aboriginal peoples living in the far north without access to potable water. While I have not yet bought the stock; AQUAtap units as manufactured by Quest Water Solutions Inc. QWTR-V hit H. @ $1.60. Low .54 and currently @ $1. would seem to be a reasonably priced speculative stock with good future potential I will track for awhile on my watch list of companies to buy.

 
The demand for water for  "fracking" oil and gas wells to increase or extend production is putting severe demands on available supplies and I have several companies already in my portfolio active in this field as well. Companies in my portfolio include Poseidon Concepts PSN/TSX, Gasfrac Energy Services GFS/TSX which was heavily promoted by American newsletter writers and has dropped precipitously, but the problems with management seem to be on the mend and stock may have hit its low around $2.10 so a SMALL speculative position is warranted, but watch it like a hawk. I am also looking at Ridgeline Energy Services RLE-V .60 OTCQX/RGDEF FR/RL7, each with a unique approach to these vital needs relating to water usage in the O/G industry.
 

thinker70

Re: Water as an Investing Thesis

Water investments are one of those things that will make a big move overnight, based on new policies. Water needs to be commoditized and marketed rather than managed by politicians.  It's one for the long term.

Re: Water as an Investing Thesis

I owned PICO for years on the recommendation of Chris Mayer and it never went anywhere and I finally sold at a small loss. Wish you had mentioned company names which makes it easier, I like to access websites to see what information is available. Will have to look up LMNR as it is not one I am familiar with. Surprised there has not been more input since I posted, I have at least a dozen companies I can write about when i can find the time. Actually I would be happy to see Pinnacle itself take the lead and do some research on stocks of merit in this sector.

thinker70

Re: Water as an Investing Thesis

Great forum, Thinker.

I am watching LMNR and PICO (both trading on NASDAQ) as my water plays.  This is a new fronteer for me and there are so many questions.  Are we to view these as services or discovery plays? Is water to be commoditized?  I just dont know.  

I hope to learn more from this forum.