Best Water Stocks to Buy

Water is a crucial component throughout the economy. These water stocks and ETFs stand to gain.

drop of water falling into pool
(Image credit: Getty Images)

Investors should take a few minutes to consider investing in water stocks.

Most of us take water for granted. We think nothing of turning on the sprinkler to water the grass, filling the cooler with ice or running the dishwasher. But investors understand that H2O is a scarce resource. It's big business and investing in water is a long-term opportunity. In fact, many fund managers refer to water, which humans need to survive and businesses to thrive, as the new oil. 

Today, water is a $483 billion global industry (measured by revenue) that is facing intense challenges. 

"You turn on your tap and expect water. But when it doesn't work, all of a sudden there's all this attention on it," says Leslie Samuelrich, president of Green Century Funds. Lake Mead, the country's largest reservoir, is near record lows, facing persistent drought conditions. This winter, a train derailment in Ohio made news when it contaminated drinking water. The U.N. held a water conference in March that was a call to action to tackle global issues.  

And yet, water is as important to the manufacturing and service sectors as other supply-chain links are. Semiconductor makers need pure water to make chips. H2O is needed to cool data centers. Restaurants and hospitals can't operate without clean water. Water, or a lack of it, is an operational risk, just like the possibility of a cyberattack. 

"Water is a mission-critical asset needed for companies to grow," says Lori Keith, a portfolio manager at Parnassus Investments.

Water investing is a megatrend 

No wonder investors are gulping up water stocks. A prime example is leading water-tech stock Xylem (XYL), a member of the Kiplinger ESG 20, the list of our favorite stocks with an environmental, social or corporate governance focus. Wall Street sees other opportunities ranging from makers of smart sensors that detect leaky pipes to water-treatment solutions that remove harmful contaminants to precision farm irrigation systems that minimize water usage. 

"Water is a megatrend," says Janet Glazer, manager of the Fidelity Water Sustainability Fund

Below, we've provided some suggestions for the best water stocks to buy, most of which land in the midsize camp by market value, that offer an array of solutions to water-specific problems. Prices, investment returns and other data are through April 30, unless otherwise noted.

Contributing Writer