The water treatment industry has been recovering from COVID-19 pandemic lows of late, driven by the strong demand. The rising demand for clean water amid increasing urbanization, industrialization, and other environmental concerns alongside diminishing water resources, is expected to drive the growth in the water technology industry. The accelerated adoption of digital technologies, including Intelligent Asset Management, Geographical Information Systems, AMI infrastructure, 5G, and Artificial Intelligence, is transforming the water treatment processes.
According to Allied Market Research, the water treatment technology market is expected to reach $265.90 billion by 2030, growing at a 4.8% CAGR. The recent technological advancements and growing R&D activities are boosting the industry’s growth.
Given this backdrop, we think it could be profitable to invest in quality water treatment stocks Watts Water Technologies, Inc. (WTS) and LIXIL Corporation (JSGRY), which are expected to achieve immense growth in the near term.
Watts Water Technologies, Inc. (WTS)
WTS in North Andover, Mass., designs, manufactures, and sells products and solutions that manage and conserve the flow of fluids and energy into, through, and out of commercial and residential buildings. The company operates primarily in the Americas, Europe, the Asia-Pacific, the Middle East, and Africa. In addition, WTS provides residential and commercial control products, air-conditioning and gas products, hot water solutions, and drainage products.
In February, WTS declared that the Corporation would pay a quarterly dividend of $0.26 per share on each outstanding share of the company’s Class A common stocks and Class B common stock. This reflects the company’s ability and commitment to paying back to the shareholders.
In the fiscal 2021 fourth quarter, ended Dec.31, 2021, WTS' net sales increased 17.5% year-over-year to $473.90 million. Its gross profit grew 17.8% year-over-year to $199.30 million. WTS’ operating income improved 15.1% from the prior-year period to $62.6 million. The company’s net income and net income per share came in at $40.1 million and $1.19, respectively, registering an increase of 37.3% and 37.2% from the prior-year period.
The $443.05 million consensus revenue estimate for its fiscal year 2022 first quarter, ended March 31, 2022, represents 7.2% growth from the same period in 2021. The $1.37 consensus EPS estimate for the to-be-reported quarter indicates a 10.7% year-over-year rise. The company has an impressive earnings surprise history; it has surpassed the consensus EPS estimates in each of the trailing four quarters.
Shares of WTS have gained 12.9% in price over the past year. It closed yesterday's trading session at $134.54.
WTS' POWR Ratings reflect this promising outlook. The stock has an overall B grade, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
WTS has an A grade for Quality and a grade B for Stability. Within the B-rated Industrial - Manufacturing industry, it is ranked #10 of 38 stocks.
To see additional POWR Ratings (Growth, Value, Momentum, and Sentiment) for WTS, click here.
Click here to check out our Industrial Sector Report for 2022
LIXIL Corporation (JSGRY)
Headquartered in Tokyo, Japan, JSGRY manufactures and sells building materials and housing equipment worldwide. The company operates through four segments: LIXIL Water Technology (LWT), LIXIL Housing Technology (LHT), LIXIL Building Technology (LBT), and Housing & Services Business (H&S). JSGRY manufactures and sells sanitary equipment, building materials, curtain walls, household goods, and DIY products.
JSGRY's revenue has increased marginally year-over-year to JPY 378.20 billion ($3.02 billion) in its fiscal year 2022 third quarter ended December 31, 2021. The company’s revenue from LIXIL Water Technology (LWT) segment improved 15% year-over-year to JPY 226.70 billion ($1.81 billion). Its cash and cash equivalents were valued at JPY 111.20 billion ($886.74 million) over the nine months ended Dec. 31, 2021. And the company’s total current assets grew 9.7% over the nine months to JPY 699.90 billion ($5.58 billion).
The stock’s price has improved marginally over the past month and closed yesterday's trading session at $33.08.
JSGRY’s POWR Ratings reflect a strong outlook. The stock has an overall B rating, which translates to Buy in our POWR Ratings system.
JSGRY has a B grade for Stability and Value. It is ranked #18 of 52 stocks in the B-rated Industrial - Building Materials industry.
Click here to see JSGRY ratings for Momentum, Growth, Sentiment, and Quality.
Click here to check out our Industrial Sector Report for 2022
Want More Great Investing Ideas?
WTS shares were trading at $134.73 per share on Wednesday afternoon, up $0.19 (+0.14%). Year-to-date, WTS has declined -30.49%, versus a -6.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
2 Water Technology Stocks to Add to Your Portfolio StockNews.com
