Thursday, January 10, 2008

Invest in water

"There are still plenty of opportunities for investors to profit from the coming water boom. Right now, many of these firms are small companies that most analysts, let alone the public at large, have never heard of. But some of them will soon be giants. After all, with the global water industry valued at $300bn a year by the UK Trade & Investment ministry, it can't be long until investors finally catch on.

One great water firm that "is yet to hit British investors' radar" is Doosan Heavy Industries and Construction (Korea: 034020), says Edward Lam of Lloyd George Management. [Editor's note: Unfortunately, this stock does not trade in the U.S .] They invested in the company "partly as a water play, but also because it's a great company." The South Korean firm makes desalination plants - indeed, it is "the world's largest maker of plants that purify seawater," says Keejin Koo on Bloomberg. It already has massive plants all over the Middle East and is constantly winning new projects. Alongside its desalination plants it also builds power plants - so as our energy needs grow, it gets a second kick. The company is currently on a forward p/e of 15.9, which is cheap for such a good growth story."

Wall Street is getting on to the water shortages issues: Invest in desalination technology, that's their brief. With droughts expected to worsen, and water usage expected to increase, more fresh water is going to be needed. Disaster capitalism, or how to make a quick buck from tragic events. Do you know that Dubai lives off desalinated water, but that it has to purchase desalination technology? Do you know what this means? It means that if they do not behave, they may be embargoed (not that they have any intention of "not behaving"). And if they are embargoed, they will die from thirst.

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