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In Finance, what is a Water Stock?

Mary McMahon
By
Updated May 17, 2024
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A water stock is stock in a company associated with water technology such as delivery of water to utility customers or the development of new filtration systems for water. Water stocks are listed in their own index on some stock exchanges and they are also reviewed by numerous financial publications providing information for investors about various kinds of stocks. Water is a universal human necessity and consequently many water stocks perform very well and highly consistently, making them a good investment opportunity for some investors.

One large area of the hydrocommerce sector is water utilities. Not all utilities publicly trade on the stock market but those that do tend to be large, serving numerous areas with both drinking water and wastewater treatment services. These companies can also handle specialty services like use of treated water for landscaping. Rapidly diversifying water utilities can be a reliable investment as they demonstrate a commitment to innovation and creativity, in contrast with companies focused on providing core services only.

Companies involved in the development of water technology often go public to access funding for major development initiatives. These companies can be involved in water treatment, purification, transport, storage, and other activities. Their work can include endeavors designed to improve access to potable water in the developing world, an increasing concern in many regions where populations are increasing and water supplies are not keeping pace. Investors concerned about ethical investment may find opportunities among such companies.

Reviewing a water stock index can provide information about the overall performance of the hydrocommerce sector. This information can be used when judging individual stocks to determine if they are good purchases. People researching a water stock may also want to consider other issues like how companies are organized, what kinds of services they offer, and their history. Evaluations of individual companies as prospective buys can be found in financial publications and online, at sites that offer investment information and advice.

People who are not comfortable managing their own investments can choose to participate in a mutual fund with investments in a water stock index, or can discuss potential water stock purchases with their financial advisors to see if they can be added to a managed portfolio. As with all investments, it is not advisable to sink all funds into a specific stock or sector. Distributing investments across numerous sectors and companies limits risks and allows portfolios to keep growing even as individual sectors and stocks decline in value.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a WiseGeek researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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Mary McMahon

Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
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