I didn’t know too much about this topic before today, but had a very lengthy conversation earier about market trends.
With very little research and after a phone call im pretty hooked on the concept of water desalinization being a key role in the future.
So my background on this is light, but was wondering if anyone else was checking on industry leaders in this process, patent owners, price per gallon vs regional or national costs etc.
It seems it’s going to be hard to make money on this for another 10 or 20 years, but to get in early is nice.
it’s a pretty tough market to play. only pure play that i know of that is listed in the U.S. is Consolidated Water (CWCO). interesting little company with plenty of cash, no debt and is building a desal plant in Baja right now, which should kill when it comes online next year due to the drought. it’s worth taking a look.
Matt - what do you think will be optimal timing to get in the market? CWCO has been up and down but relatively flatlined in trajectory. Its probably going to be until a catalyst hits the market, such as a spike in water prices worldwide. I just don’t see this hitting for 5-10 years.
yeah. not going to make some grand call for something like this. i’m not really into predicting weather patterns and such. not overly bullish on CWCO either. its just okay and not too poorly priced. that said, i’d expect it to absoutely kill and for investors to flock to it en masse, if heavy rains don’t come before late 2016. but again, a moderate intensity el nino is potentially on its way so who knows. does it come this year, next year, 2017? who knows when a historically heavy rainfall will hit the west coast, and the carribean in CWCO’s case.
This isn’t a pure play water desalinization company, but this is a pretty cool company that has caused a lot of talk in the oilfield services industry lately. Much of the value of the company is tied to a recent licensing deal with Schlumberger, but all of their current profit is from the water desalinization business. Neat company.
One great reason not to invest: It’s been a big topic among advisors at conferences this year. Since they’re normally the second to last to know about trends (retail obviously being first), I’d say you’re about 3 years too late.
Not saying there aren’t good companies to be found, but the dumb money is already there.
^ i don’t think the “buy water” strategy has ever been a good or overly profitable proposition. it’s like “buy wind” or “buy sand”. it sounds good and the reasons to buy water companies are very easy to understand, or so it seems to the general population. but with no value add, variable pricing, high capital costs, long project lead times and fairly elastic demand, desal or water treatment plants generally have a very low IRR. this is especially true for small companies with high costs of capital.
This company doesn’t build the plants. From what I understand they build equipment that is used in desalination plants, so much less capital intensive. This company hardly has any capex at all.
I only brought this company up b/c I follow the distressed oilfield services industry and saw this company as an actor that may ruin things for competitors, and remembered they had a water desalination business, too. It’s not building plants; its manufacturing and selling equipment that is used in the plants.
This company is mostly a ‘disruptive’ pressure pumping oilfield services company, so I wouldn’t buy it as a pure water desalination play. Just bringing it up as a pretty unique, interesting company.