American Water Azione Forum

Slowly build up a position - water the liquid gold of the 21st century ✌️

hey guys

while searching for interesting titles I came across $AWK (+3,25%) stumbled upon

I find the rating very interesting.

do you have any opinions?

My foray into water shares has so far been a good idea that I will continue to pursue

Severn Trent $SVT (+0%) has increased its dividend to shareholders after profits rose by a fifth last year, despite the company's wastewater pollution rising by a third in 2023.

The FTSE-listed company, which supplies water to much of Wales and the West of England, increased its final dividend by 9% to 70.1p a share, while profits rose to £201.3m.

I've got my water goods basket

out $AWK (+3,25%)
$XYL (+1,33%) and just $SVT (+0%) started to build it up. I'll keep at it

https://uk.finance.yahoo.com/news/severn-trent-hikes-dividend-despite-081605635.html

Small addendum

The industry regulator Ofwat will meet soon to decide on the increase in draft legislation between 2025 and 2030. The draft proposals are due to be announced on June 12.

Severn Trent wants to invest 12.9 billion pounds and increase customer bills by 35.7 percent.

Between 2020 and 2025 the average annual bill for Severn Trent was £402.63, for the next five years the average would be £546.35 if Ofwat's business plan is accepted.

https://www.bbc.co.uk/news/articles/c0dem8v7epzo

Investing in climate change - rising temperatures, rising portfolio.

Hello community,

thank you for your great response to my last post Sin Stocks - Stocks that are considered sin sin. Today I would like to share another controversial article with you:

How do I profit from climate change?

Climate change is being talked about like a pig in practically all the traditional media, especially in Germany. I'm less interested in hyping up the next apocalypse than in taking a rational view: what megatrends are emerging and how can I invest in these trends?

To keep things interesting for you, I won't be writing the usual blah blah blah about renewable energies, electric cars, hydrogen and so on. I'm sure you're already familiar with that. I'm also interested in stocks that might only be interesting at second glance and shouldn't be found in every 08/15 portfolio.

Before we get started, one more request: let's stay on topic and talk about shares. In my opinion, moral or political discussions have no added value if no investment can be derived from them.

Impact 1: Increase in natural disasters and extreme weather

The hurricanes in the USA, the flood disaster in Arthal... each of you will be aware of one event. There is no doubt that natural disasters can cause enormous damage. The task of the next few decades will probably be to make buildings more resilient, to make cities more resilient and so on. However, the buildings that are already standing do not (yet) meet these requirements. Therefore, the first share is:

$CAT (-2,91%) Caterpillar.

With their construction machinery and clearing vehicles, they can clear up what has been destroyed. Our colleague @TheOrangeExcavator recently wrote a nice introduction to this share here on the platform.

Then, of course, there is insurance, as the need to insure against such events will increase. The insurance business model is based on calculating risks and then setting a price. If the risks increase, the price rises - and so does the need for insurance.

$MUV2 (-0,5%) Munich Re has been able to increase its profits by over 20% p.a. in the last 5 years. In addition, there is a dividend yield of around 3.3%, which is constantly being increased. The share is currently performing well - in my view, something for the watchlist.

Much more exciting from my point of view are "shovel manufacturers" for insurance companies. I am talking, for example, about $VRSK (+3,32%) Verisk Analytics, which specializes in data analysis for insurance companies (and increasingly other industries). They either create analyses for their customers or offer their analysis tools for independent analyses.

Why take the risk of a single insurance company when you can rely on the supplier in the background? Cash flow and profit have been growing at double-digit rates p.a. for 5 years. Sales growth is estimated at 7.5 %. All this with high sales stability. A very interesting growth stock in my view, which could be picked up in the next correction.

Impact 2: Rise in sea level

Sea levels are expected to rise by up to 1.1 meters by 2100. Mega construction projects are needed to protect against this. Here I have (how could it be otherwise) a Dutch company on my radar: $ARCAD (-0,27%) Arcadis. The company offers planning and technical development services for construction and infrastructure projects. This is not a pure play on sea level rise - they do many projects, such as environmental remediation, mobility projects and management consulting.

Sales growth >8 % in the last 5 years, profit growth of approx. 15 % p.a. in the last 5 years speak for themselves.

It has also just performed quite well, certainly something for the watchlist. If interest rates fall again and the scope for investment increases again, this share will certainly also benefit.

Impact 3: Water shortage and drought

Sea levels are rising - and water is becoming scarce? No contradiction! We are talking about fresh water/drinking water.

In my view, the most interesting value here is $XYL (+1,33%) Xylem. They offer a wide range of water-related technologies: Transportation, testing, wastewater treatment, purification and, and, and.

Sales growth >10% in the last 5 years, estimated earnings growth of 11%. It has also just performed well, with a P/E ratio of 25 I would consider buying in. The share always comes back well.

A look at water utilities could also be worthwhile, for example $AWK (+3,25%) American Water Works. I presented the share in a post-buy article of mine - if you are interested, you can find more about the company there.

If you want a more exotic stock, you can take a look at the $TORO Toro Company. The company offers irrigation systems for agriculture, golf courses and sports fields, among other things. The less water there is, the more efficiently it has to be distributed. They are also active in "snow and ice management". Could also become more relevant in winter with increasing extreme weather events. Sales growth of over 8% p.a. in the last 5 years, profit growth of 6%. Plus a dividend of 1.6%. Currently quoted below the historical P/E ratio.

Impact 4: Changing biodiversity

How can seeds be adapted to the changing climate as a source of food for humanity? Monsanto used to be a company in this field - now part of Bayer. From my point of view, it's a collection of powder kegs that regularly blow up.

But there is also a pure play alternative: $CTVA (-0,19%) Corteva.

They produce seeds, pesticides, fungicides, etc. The key figures are somewhat mixed, but in my view it is an exciting candidate for the watch list. The business could gain more and more momentum due to climate change.

It is also becoming increasingly important to get as much as possible out of existing crops. Here I myself have $DE (-2,8%) Deere in my portfolio.

Sales growth over 5 years: 9.3 % p.a., profit growth 30.7 % p.a. in the last 5 years. P/E ratio of 12 (!).

Top dog in its field. Some also see the share as an AI investment, as they are producing increasingly intelligent machines for agriculture. Smaller farmers will probably increasingly reach their limits, it will consolidate, as only "the big players" can secure the top technologies.

Due to a certain cyclicality, I have the share (currently the only one) in my savings plan.

Impact 5: Social unrest and migration

It cannot be ruled out that new causes of war will emerge in the future over fertile soil, drinking water or similar. The big players such as $LMT (+3,53%) Lockheed or $BA. (+0,48%) BAE should be familiar to most people. Less well known is probably the $KOG (+0,39%) Kongsberg Group from Norway. Its main segments are Defense Aerospace and Maritime. Double-digit sales growth, even stronger profit growth.

Unfortunately, this can also be seen in the chart. Probably too expensive due to the current crises - but in my view the share should be kept on the radar alongside the well-known stocks.

That was my presentation of some investment cases. Even if some of them seem expensive at the moment, I think it makes sense to create a watchlist of interesting candidates at an early stage. When things go wrong, you know what's on your shopping list. Then you can get into companies that should have a tailwind in the long term.

Now it's up to you:

- What (perhaps indirect) effects do you see from climate change?

- Which shares do you think could benefit from climate change?

- Which shares do you already have in your portfolio?

I look forward to your comments.

Fun fact: When I asked my girlfriend (not really interested in shares) about possible profiteers, her timid answer was: "Umbrella manufacturers?" But I hadn't found a pure player, so there was nothing in the article 😉

You never stop learning.

Your Money Man

Cash dividend payable in the second quarter of 2024

CAMDEN, NJ--(BUSINESS WIRE)-- American Water Works Company, Inc. (NYSE: $AWK (+3,25%) ) today announced that its Board of Directors has declared a quarterly cash dividend payment of $0.7650 per share of common stock, an increase of 8.1 percent.

The company expects to continue its dividend growth in the range of 7 to 9 percent over the long term and to target a dividend payout ratio between 55 and 60 percent of earnings.

https://ir.amwater.com/news-and-events/financial-releases/financial-release-details/2024/American-Water-Announces-Increased-Quarterly-Dividend/default.aspx

Unfortunately, I only recently started a savings plan, so the position is still small

Subsequent purchase American Water Works.

American Water Works is a water supplier in the USA. You often read the sentence "XY is always consumed" to express that a product is always in demand, regardless of the economic situation or similar.

In my opinion, this is often a fallacy - people always eat, for example, but what exactly? Maybe the cheap own brands...?

When it comes to water supply, on the other hand, the sentence is probably true. Fresh water is always needed - and you can't choose between 100 water suppliers.

The security of AWK's business model was therefore probably rewarded with a significant valuation premium in the past (P/E ratio between 30 and 40). The P/E ratio is now 24, which is significantly lower than in recent years and the historical average.

The dividend yield is therefore around 2.4%.

Due to the predictability of sales and profits and the crisis-proof business model, I consider the dividend to be secure and it should continue to increase in the future (last 5 years approx. 9.7% increase p.a.).

The persistent interest rates are a burden on the company to some extent, as it is also making takeovers or taking over the supply of public institutions (privatization).

In my opinion, however, this is only a temporary effect.

I've also had the water tech stock Xylem on my radar for a long time - but it's still too expensive for me. Hence the decision in favor of AWK.

What are your thoughts on the share or the sector?

First purchase, and nice dividend

Water - chemistry in everyday life

Today a topic is announced, which stood above all by Nestle $NESN (-0,22%) in the last few months. But even on hot summer days, our livelihood and the business behind it are discussed again and again.

What was with Nestle?

Nestle is almost permanently in the criticism. I expressly ask that the activities and personal opinions under the post not be made known. The business unit "Nestle Waters" operates production sites in about 34 countries, for example for the table water "Pure Life". The criticism behind this refers to the production sites in areas where there is traditionally a shortage and, in accordance with pumping, the groundwater level is further lowered. I will leave it open whether Nestle is primarily to blame in this respect. In any case, it is important to remember that water licenses are officially sold to Nestle in all countries. Nevertheless, some YouTubers have realized that they can generate a lot of attention and money by denouncing international corporations. I hope at least that they will think about this in the future when they enjoy their Wagner pizza or their Kitkat in live streams. Otherwise, that would be tantamount to a double standard ...

Whatever one may think about it. There is definitely a danger of nationalization in the event of water shortages at private waterworks. Therefore, I would generally exclude an investment in this respect. In drinking water treatment, however, one cannot do without the private sector. The uses of the individual products are too varied for them to be used specifically for water.

But what is the situation in Germany?

Based on the Food Act, Germany has the Drinking Water Ordinance. The aim of the ordinance is to protect human health and to ensure quality and purity. Since the 2012 update, the problems of legionella have also been taken into account. The suppliers are responsible for this.

More precisely defined are the data in the annexes of the Drinking Water Ordinance itself. https://www.gesetze-im-internet.de/trinkwv_2001/BJNR095910001.html

But how do I now manage to make water usable?

Of course, this depends first and foremost on your regional origin. Water always has different quality classes and must be processed differently accordingly. According to the German Federal Environment Agency, almost 63% of drinking water comes from groundwater. Significant differences exist, however, especially in the east/west comparison. The irregular and ruthless planned economy of the former GDR has left its mark on the environment even today. In general, however, there are always strong impairments along the industrial metropolises. While the Saale, Oder, Ruhr and Ems rivers in particular bear the marks of industrialization, the soils around the chemical sites of central Germany in particular are still heavily impaired. I have taken corresponding accusations from the Water and Soil Atlas.

But why this huge introduction now?

Both in the air and in the soil we have countless impurities or even toxic particles. These are washed out by rain, get into the soil and thus ultimately into the groundwater.

In the course of this, suitable methods must now be found to maintain our drinking water quality.

Basically, we have the possibility to separate the substances from the water mechanically, thermally or chemically.

How does this work?

Due to the difference in regional water qualities, drinking water treatment must of course always be considered very specifically. Nevertheless, chemical treatment with ozone is always the first step. The treated drinking water is then fed into the public network via mechanical separation stages, such as sedimentation and filtration, through to chemical separation with regard to the degree of flocculation and pH value regulation. Samples are regularly taken by the authorities and tested in independent laboratories.

But who benefits from drinking water treatment?

From a personal point of view, I consider the investment in a private drinking water producer, such as Nestle or Danone, as risky. $BN (-0,89%) as risky. One can be denounced too much in the public perception and the more likely a discontinuation of the table water can become. Furthermore, especially in countries where there are shortages, one may well expect nationalization of the production and treatment facilities.

In addition, there are lucrative and promising opportunities for participation in the suppliers.

An investment in the treatment of drinking water can necessarily be linked to the treatment of wastewater.

The most prominent representatives of the private sector in this regard are American Water Works $AWK (+3,25%) , known as the dividend king. In direct competition, if one can call it competition at all, is Essential Utilites, but also United Utilites. $WTRG (+3,09%) but also United Utilites $UU. (+0%) in Great Britain.

On the German market, by the way, Veolia $VIE (-0,38%) with its subsidiary Veolia Water dominates the German market. It holds countless stakes in municipal waterworks. All in all, according to its own website, it supplies about 5 million people in Germany with drinking water and processes their wastewater.

Apart from direct drinking water processing, there are also very lucrative suppliers of drinking water solutions and quality assurance. The best known example is probably Xylem $XYL (+1,33%) . In addition to fluid technology, which includes pump construction and other equipment, the analytics division is a sunshine for investors. The broad range covers the entire field of water analysis. This means that the company does not only participate in municipal water systems, but also in industrial customers who are subject to legal requirements. It is almost impossible to find a direct competitor that is so broadly positioned in this segment.

However, if you want to give it a try, KSB's pumps division is $KSB (-0,78%) is very representative in Europe. Whereas in the USA, IDEX $IEX (+0,61%) can offer an alternative in the field of technical pumps.

But also in the field of chemical water and wastewater treatment, some companies have specialized.

Ecolab $ECL (+2,32%) , better known for cleaning agents and disinfectants, has been owned by Nalco Water since 2011. The focus here is on water and wastewater treatment additives, which are also part of any drinking water processing. Notable among these are slime solvents for biocides and legionella, as well as corrosion protection additives and hardness stabilizers.

Another particular competitor is DuPont $DD (-2,43%) . In particular, the "Water & Protection" division. The focus here is on special resins that can adsorb specific substances from water and also filter them. Depending on the sourcing, this extends into the nano- and ultrafiltration range. Ion exchangers can also be used to ensure higher water purity.

Have you used water today? Then you have probably already come into contact with one of these representatives.

I had a nice conversation here about my investments and was encouraged to explain how I come to certain investments.

First of all, I have completed a commercial apprenticeship in the water supply and waste disposal industry and then worked there for 13 years.

One of my investments is

$VIE (-0,38%)

Considering the scarcity of water and a possible lack of resources in the future, I consider this company to be one of the most sustainable on the stock market.

A mixture of $WM (+2,82%) and $AWK (+3,25%)

Except that they operate internationally.

Apart from water supply and disposal, they use the resulting sewage sludge for their own CHP units to generate electricity. Many clear plants run completely self-sufficiently on their own electricity. Apart from that, they also feed green electricity into the grid in case of overproduction. If the values are good, the sewage sludge is also used as fertilizer. Apart from that, they extract magnesium ammonium phosphate from the sewage sludge, which agriculture uses as a compound fertilizer and the phosphate industry uses as a raw material. Furthermore, they are one of the leaders in water desalination technology.

When you think about Israel, who already get about 60% of their water from water desalination, I imagine that as a good return on investment in other warm countries.

And, of course, the waste and recycling part, which should not be ignored.

Now, assuming the MADMAX scenario and water becomes so scarce, however, it could also be that companies, like Veolia, are expropriated in certain countries. Purely hypothetical.

Therefore, in my opinion $XYL (+1,33%)

an exciting company. If you can expropriate waterworks, it looks worse with the necessary know-how to build something like that.

The great technology used in sewage treatment plants and waterworks must also be developed and constructed.

Xylem does this.

Pressure pipes, pumping stations to pump water over several km, irrigation systems for fields and aggro economy.

Software to detect when pressure drops in the pipelines to detect and locate havarien in time, and pumping systems for firefighting technology.

In the major wildfires in California, Xylem technology was used to transport the necessary firefighting water.

They also use their technology to clean up the oceans.

So I see these two picks as very promising.

Stock analysis/share presentation ⬇️

Today we are talking about the company American Water Works: $AWK (+3,25%)

What is American Water anyway 🧐

American Water Works is one of the leading companies in the water utility industry in the United States. The company operates in 16 states and operates water treatment plants, water mains, wastewater plants, and sewers.

The industry is highly regulated and has experienced steady growth in recent years. Consumption of water continues to increase, which is helping to keep water utilities growing.

KGV:

The company is currently valued at a P/E ratio of approximately 33.

Market capitalization: 🏦

The company has a current market capitalization of around 25 billion euros.

How many employees does the company have: 🙋🏽‍♂️🙋🏻‍♀️

American Water Works company currently has around 6500 employees.

Dividend yield: 💰

American Water Works pays its shareholders a dividend yield of just under 1.9% per share. This distribution is made on a quarterly basis. Dividends are paid in March, June, September and December.

Some history:

American Water Works was founded in 1886, when the company began building and operating water mains in the state of New Jersey. Over the years, the company has grown to become one of the largest and most highly rated water utilities in the United States.

American Water Works has expanded its business in several ways, including the acquisition of several water utilities and the opening of subsidiaries in other states. The company's stock first traded on the New York Stock Exchange in 1968.

Weaknesses of the share: 📉

• The company is dependent on the rates it charges for the use of its services, and there is a risk that regulators could reduce rates.
• The company's valuation is not exactly low, with a P/E ratio of around 33
• The company is also dependent on the grants and taxes it receives from state and local governments. There is a risk that these payments could be reduced, resulting in a reduction in the company's revenues.
• With a high level of net debt and relatively low EBITDA, the company has a weak financial situation.

Strengths of the share: 📈

• American Water Works is one of the largest companies in the water utility industry in the United States.
• The company has been in business for over 130 years and has a successful history.
• American Water Works pays its shareholders a nice and continuous dividend of currently just under 1.9%.
• American Water Works has an experienced leadership team that manages the company's operations.
• The company receives revenue from the rates it charges for the use of its services, as well as grants and taxes it receives from state and local governments.

Management of American Water: 🙋🏽‍♂️

American Water Works is led by an experienced management team consisting of President and CEO Susan Story, Executive Vice President and Chief Operating Officer Walter Lynch, Executive Vice President and Chief Customer Officer Joseph DiNunzio, and Executive Vice President and Chief Human Resources Officer James McCaffrey.

American Water's largest shareholders:

The company's shareholder structure is dominated by institutional investors. The company's largest owners are Vanguard, Blackrock, State Street, Geode Capital Management and JPMorgan Chase.

What is the company's business model: 🏁

American Water Works operates in 16 states and provides a wide range of water utility services. The company operates water treatment plants, water mains, wastewater plants, and sewers.

The company receives revenue from the rates it charges for the use of its services. The remainder of its revenues are derived from grants and taxes received by the Company from state and local governments.

What does the stock look like on the chart? (US dollars converted into euros) 📈📉

Let's take a look at the chart of this company. We are currently at a price of around €128.00. In recent months, the high here was around 152.00€. This was simply approached 3 times and each time sold off again. This means that at 152.00€ is a very strong resistance. In the meantime, the share has moved a little further away from this resistance. At first, the share held at around 140.00€. This was also a strong support zone for a long time, which now counts as resistance. This was finally broken through sustainably and it went further down. The share has now tried to form a floor at just under € 132.00 but this has not held either. It would now be important if American Water Works goes back towards 132.00€ and forms a floor there to continue to rise. Currently we are in no man's land and the next major support zone would be only at 120.00€. So very important now to find the bottom again and to run to the resistance at 140.00 € or even better to break through sustainably.

I am very curious where the journey will now go.

My conclusion on the company: 📝

American Water Works is one of the largest companies in the water utility industry in the United States. The company has a successful history and is led by an experienced management team.

American Water Works generates revenue from the rates it charges for the use of its services and from grants and taxes it receives from state and local governments.

Investors should be aware of the risks associated with investing in American Water Works, including the risk that regulation may change, rates may be reduced, or payments from state and local governments may be reduced.

Nevertheless, I personally find the company very exciting and have also had it on my watch list for an extremely long time. Currently, I am also waiting here but still something.

Very nice you find here the dividend yield of over 1.9%, but for me the company would be a little too expensive with a current P/E ratio of over 33.

I will continue to monitor the company and perhaps a tages strike.

Now I would like to hear your opinion in the comments on this stock. ⬇️

What do you think about American Water Works and did you already know this company?

Do you have this stock in your portfolio? 🤔

Feel free to let me know in the comments.

This is of course not investment advice but just my own opinion that I want to share with you! ⁉️