How to Get Started in ASX Water Stocks

Projections show that half of the global population will live in water-stressed areas by 2025, making water stocks more important than ever.

person fills up glass of clear water at sink

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Water is one of the staples that humans cannot live without. It’s also a scarce resource, as half of the world’s population will live in a water-stressed area by 2025, as per the World Health Organization.

Clean water is critical for the health of populations, and that’s where water treatment and water technology companies have entered the market and thrived. Water technology is expected to boom in the coming years as countries across the globe seek more solutions for purifying water.

This is why investors might be looking to invest in water stocks. What was once primarily an ethical choice is fast becoming a return on investment for early adopters.

What is water investing?

Water covers a broad spectrum of businesses, often dependent on country-specific regulations and levels of privatisation. For example, water utilities are generally considered to be a stable and much less volatile sector, making them an ideal choice for long-term investors.

That said, investing in water can cover verticals as diverse as plumbing and bathroom supplies, such as the Reece Group (ASX:REH), as well as water assets themselves, such as Duxton Water (ASX:D2O); it can also involve water treatment stocks, such as De.mem (ASX:DEM) and Calix (ASX:CLX).

Why do investors choose the water market?

Decreased rainfall and the threat of ongoing drought in Australia make water an attractive investment. It’s a commodity that is becoming increasingly rare, but as mentioned is essential for human existence.

For the savvy investor there are plenty of opportunities to invest in water. The Investing News Network used TradingView's stock screener to find the biggest ASX water stocks by market cap. Companies are listed by market cap from largest to smallest, and data was accurate as of December 7, 2021.

1. Hansen Technologies

Market cap: AU$1.03 billion

Hansen Technologies (ASX:HSN) is a global provider of software to customers in more than 80 countries focused on the energy, water and communications industries. Founded in 1971, the company has grown to a customer base of more than 600, with target revenue of AU$500 million by 2025. The company expects to reach this target through its organic revenue growth and proven aggregation strategy.

In March 2021, the company's share price took a leap, possibly prompted by its significant agreement with Germany-based Telefonica (NYSE:TEF), resulting in an expected AU$25 million in revenue for Hansen.

2. Rubicon Water

Market cap: AU$277.59 million

First founded in 1995, water supplier Rubicon Water (ASX:RWL) listed on the ASX in September.

Rubicon has created a water-saving automation irrigation system that is used by governments, irrigation water authorities and farmers. For farmers, the technology modernises gravity-fed irrigation systems and improves the reliability and accuracy of water supply to farms.

The technology is deployed across more than 1 million hectares of land across 17 countries, and the company is on track for AU$80.4 million in the 2021 financial year.

3. Duxton Water

Market cap: AU$176.74 million

Duxton Water owns and manages a portfolio of water rights in Australia, primarily along the South Murray Darling Basin. The basin makes up 80 percent of Australian water trade.

Company revenue comes from offering a range of water supply solutions to irrigators, like entitlement leases, spot allocation sales and forward allocation contracts. Due to a constrained supply of water nationally and the impact of climate, Duxton feels confident there is growing demand for its business. The company boasts that it is the only listed vehicle that provides direct exposure to the Australian water market.

4. Purifloh

Market cap: AU$38.62 million

Purifloh (ASX:PO3) operates in water sanitation, indoor air purification and medical sterilisation. The company aims to purify water using its Free Radical Generator (FRG) technology, which will use free radicals to naturally purify water.

The FRG technology has been a focus for the company. While the technology has multiple applications, including water purification, another is as an aerosol that aims to kill airborne viruses and prevent the spread of COVID-19.

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.

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Ronelle Richards

Ronelle Richards is a freelance journalist and editor based in Melbourne. She covers news, business, finance, mental health, travel and anything else that piques her curiosity.

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