Four Water Picks to Aid Flint, Drought
Trimble Navigation, Mueller Water, Xylem and Itron are recommended in the wake of the Michigan and California crises.
WedbushLast week, we hosted our first annual Sustainability and Infrastructure conference in London, featuring our water coverage with some industry insights on technology’s role in infrastructure.Additionally, we hosted with Xylem (ticker: XYL ) a tour of one of the region’s largest water treatment plants (the Thames Mogden facility). Our thoughts on the some of the participating companies may be found below, with our outlook on the municipal and residential markets remaining positive. We were also encouraged by a sense that some of the industrial end-markets were seeing more steady demand, suggesting inventory levels were bottoming and destocking witnessed last year may largely be complete.In February, we attended DistribuTECH and could clearly see the traction smart technologies were experiencing across the utility and infrastructure segments. Ongoing mandates and the desire for increased asset productivity are driving sizable awards for companies such as Itron ( ITRI ) and Silver Spring Networks ( SSNI ). Meanwhile, comments from the panelists at our conference (Tetra Tech ( TTEK ), Pure Technologies [of Canada] and Global Water Intelligence [of the U.K.] provide further support to the positive outlook toward “smart” water.Given the aforementioned and the increasing attention water infrastructure is gaining in response to the California drought and Flint, Mich., crisis, we continue to recommend Trimble Navigation ( TRMB ), Mueller Water Products ( MWA ), Xylem and Itron.The Tetra Tech outlook remains bullish, with some signs oil and gas is moderating, trimming estimates. Our discussions with Tetra Tech Chief Executive Dan Batrack were fairly encouraging. The company continues to see strength in local, state, and federal spending, with a lot of encouraging signs of increased investment in water infrastructure across the board, not just in California. The company also re-emphasized its commitment to investment in smart water, as evidenced by the announced acquisition of [closely held information-technology firm] Indus. Our concerns on the Department of Defense business were allayed; however, we noted some incremental weakness in the U.S. oil-and-gas business, driving us to prune our full-year earnings-per-share estimate by four cents to $1.85 from $1.89, the midpoint of the company’s guidance.....MORE