Water is Essential For Life

Water

Companies in the water industry are among the most important in the world. Water covers two-thirds of our planet, but only 0.3% of it is drinkable. What’s more, 785 million people do not have a basic supply of drinking water. In addition, global demand will exceed the amount available by 40% within 15 years.

American Water Works (AWK) is benefiting from this growth market. The company is the largest clean and wastewater utility in the USA and has been increasing sales and profits for years. This was also the case last year. It gains new customers every year through acquisitions and organic growth. Veolia (VEOEY) also develops water and waste management solutions that contribute to the sustainable development of communities and industries.

In 2020, the group provided drinking water to 95 million people and wastewater services to 67 million. But that’s not all. Veolia has announced its first recycling plant for electric vehicle batteries in the UK. The plant is expected to have enough capacity by 2024 to process 20% of the UK’s discarded e-vehicle batteries.

Highly Fragmented Water Industry

The U.S. water utility industry is highly fragmented. According to the Environmental Protection Agency, more than 53,000 community water systems and 16,000 community wastewater systems in the U.S. currently provide water solutions to customers. Smaller providers are financially unable to meet the demands of replacing and upgrading aging infrastructures.

This leads to frequent breaks in pipelines. According to the findings of the American Society of Civil Engineers, pipe breaks occur every two minutes in the U.S. due to old water infrastructure, resulting in the waste of 6 billion gallons of potable water every day. Large service providers such as American Water Works are taking over smaller utilities and providing the investment needed to maintain and upgrade aging facilities.

Waste Disposal is a Lucrative Business

Across the globe, we generate 2 billion tons of waste annually – and the World Bank expects the amount of waste to increase by 70% by 2050. Waste disposal is turning out to be a crisis-proof and lucrative business. Whether the economy is booming or not, pandemics are rampant or not – there is a need to recycle waste or at least dispose of it.

With a market share of 30%, the industry giant Waste Management (WM) is the largest company in the USA specializing in waste management. The group operates its own recycling plants and landfills for normal household waste. Waste Management serves more than 20 million households and 2 million businesses in the USA alone. And unless a new way to dispose of waste comes about, Waste Management will continue to make good money.

Fiscal 2021 numbers again demonstrated the strength of the business model. High organic revenue growth resulted in strong cash flow and dynamic profit growth. The stable sales growth, high earnings strength and shareholder-friendly management are also reflected in the share price.

Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.
Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.

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