Divining Rod for Water Stocks

Sep 9th, 2008 – Comment

Hi Lou I heard you speak a couple months ago water stocks being a good long term buy. Can you give me some direction, companies, stocks that I should be looking at? Keep up the good work Warmest Regards Stephen Hi Stephen, There were a number of reports that got me thinking of water as […]


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Hi Lou

I heard you speak a couple months ago water stocks being a good long term buy. Can you give me some direction, companies, stocks that I should be looking at?

Keep up the good work

Warmest Regards
Stephen

Hi Stephen,

There were a number of reports that got me thinking of water as a vital resource. The first was an announcement from GE that their corporate goal is to reduce water use by 20% in the next five years. The second was news from Archer Midland Daniels that they expected water for agricultural use will come into short supply. The third piece of information came from T. Boone Pickens who it turns out holds huge water rights in the U.S.

What those three pieces of information told me was that there were people smarter and richer than me positioning their organizations to better manage how they use and control water.

When I look at a broad macro theme like water I look to a mutual fund or exchange traded fund that is positioned in the sector to see where the trends are going. I found three ETF’s that invest in the water business.

The Claymore S&P Global Water ETF

The Claymore S&P Global Water ETF

PowerShares Water Resources Portfolio

PowerShares Water Resources Portfolio

PowerShares Global Water Portfolio

PowerShares Global Water Portfolio

The Claymore S&P Global Water ETF, CWW TSX, has been in a sell off since July of 2007, but what hasn’t. It looks like it has support at $17.00 but the MACD isn’t signaling a turn just yet.

PowerShares Water Resources Portfolio, PHO AMEX, is focused on US opportunities and has the longest track record. The chart looks the most attractive and there is support at $20.50 and resistance at $22.50

The last is the PowerShares Global Water Portfolio, PIO AMEX, whose chart doesn’t seem to be finding much support.

Criterion also offers a water mutual fund in Canada.

The next part of the analysis is to go through the holdings of the ETF’s and mutual fund to examine the companies they are holding and try to better understand the sector and separate the sheep from the goats.

Between now and the end of the year I will analyze the holdings in these portfolios to gain a better understanding of the opportunities in water and share the results with visitors to the site.

Happy Capitalism!

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