Water is an absolute necessity for every aspect of development. Its need across all industries and areas cannot be understated. With a growing population and expanding industrial activities, water consumption might soon outstrip supply. This has urged an urgency for efficient water infrastructure and systems, resulting in significant opportunities for companies offering water management solutions.
Considering the industry’s tailwinds, quality water stocks The York Water Company (YORW), Pure Cycle Corporation (PCYO), and Consolidated Water Co. Ltd. (CWCO), which are tapping into the $1 trillion industry, could be sound Watchlist additions.
With the water crisis becoming more intense and concerning, the need for better and improved water infrastructure, treatment, and management has become more urgent than ever. Billions of people lack access to safe drinking water, driving significant demand for water management, water utilities, and technology companies.
To help communities across the U.S. to safely manage wastewater, protect local freshwater resources, and deliver safe drinking water, governments are taking initiatives through funding to upgrade water infrastructure.
Also, the water management systems market is expected to see significant growth in the coming years, with growing attention to water scarcity and continuous sector expansion. The market is expected to grow to $28.54 billion by 2029 at a CAGR of 13.4%. Factors like rapid industrialization, growing population, and enhanced filtration processes are driving the market growth.
With that in mind, let’s look at the fundamentals of the three top Water stocks in detail, beginning with the third choice:
Stock #3: The York Water Company (YORW)
YORW impounds purifies and distributes drinking water. The company owns and operates three wastewater collection systems, ten wastewater collection and treatment systems, and two reservoirs. It also operates a 15-mile pipeline from the Susquehanna River to Lake Redman and owns satellite groundwater systems in York, Adams, and Lancaster Counties.
On January 28, 2025, YORW’s Board of Directors declared a quarterly dividend of $0.2192 per share. The dividend will be paid to shareholders on April 15, 2025, as of the record date of February 28, 2025.
YORW has paid dividends for 28 consecutive years. The stock pays a $0.88 per share dividend annually, translating to a 2.76% yield on the current price. Its four-year average dividend yield is 1.92%. And its dividend payments have grown at a CAGR of 4% over the past three years.
On December 10, 2024, YORW acquired the wastewater collection and treatment assets of the York Haven Sewer Authority, York Haven Borough, York County. The acquisition added around 230 sewer customers to YORW’s expanding portfolio. The company’s expertise and consistent investment will ensure reliable and sustainable utility infrastructure for the community.
For the third quarter that ended September 30, 2024, YORW’s operating revenues increased 5.1% from the prior year’s quarter to $19.72 million. The company’s net income amounted to $5.86 million for the quarter, and its earnings per common share were $0.41.
For the first quarter ending March 2025, analysts expect the company’s revenue to grow 7.8% year-over-year to $19 million. Its EPS for the ongoing quarter is expected to grow 13.3% year-over-year to $0.34. Further, the company has topped the consensus EPS estimates in three of the trailing four quarters.
YORW’s stock has gained 0.7% over the past month to close the last trading session at $31.60.
YORW’s robust outlook is reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Sentiment and Stability. Within the water industry, YORW is ranked #5 among 13 stocks.
Click here to access additional ratings of YORW for Growth, Momentum, Quality, and Value.
Stock #2: Pure Cycle Corporation (PCYO)
PCYO is a provider of wholesale water and wastewater services. It operates through two segments, Wholesale Water and Wastewater Services; and Land Development. It engages in the wholesale water production, storage, treatment, and distribution systems, wastewater collection and treatment systems.
In terms of the trailing-12-month gross profit margin PCYO’s 74.18% is 65.1% higher than the industry average of 44.92%. Similarly, its trailing-12-month EBIT margin of 41.92% is considerably higher than the industry average of 21.36%. Further, the stock’s trailing-12-month net income margin of 46.32% is 260.4% higher than the 12.85% industry average.
In the first quarter that ended on November 30, 2024, PCYO’s total revenues grew 6.8% year-over-year to $5.75 million. Its income from operations before income taxes increased 85.9% from the prior-year period to $5.21 million. The company’s net income and EPS amounted to $3.94 million and $0.16, up 90.7% and 77.8% over the prior year’s quarter, respectively.
Furthermore, the company's EBITDA of $5.84 million reflects an increase of 41.5% year-over-year.
Shares of PCYO have surged 20.9% over the past six months and 21.4% over the past year to close the last trading session at $11.78.
PCYO’s POWR Ratings reflect its sound fundamentals. The stock is ranked #4 out of 13 stocks in the Water industry.
Click here to access all the ratings of PCYO.
Stock #1: Consolidated Water Co. Ltd. (CWCO)
Headquartered in Grand Cayman, Cayman Islands, CWCO designs, constructs, manages, and operates water production and water treatment plants internationally. The company operates in four segments: Retail; Bulk; Services; and Manufacturing.
On November 25, 2024, CWCO’s board of directors approved a quarterly cash dividend of $0.11 per share for the first quarter of 2025. The cash dividend was paid on January 31, 2025, to shareholders of record at the close of business on January 2, 2025.
CWCO pays an annual dividend of $0.44, which translates to a yield of 1.63% at the current price levels. Its four-year average dividend yield is 2.09%. Moreover, the company’s dividend payouts have grown at a CAGR of 6.4% over the past three years.
During the third quarter that ended September 30, 2024, CWCO reported total revenue of $33.39 million, of which its revenue from Retail and Bulk segments increased 5.1% and 3.3% year-over-year to $7.59 million and $8.77 million, respectively. The company’s gross profit was $11.63 million for the quarter.
Also, net income attributable to CWCO stockholders and EPS were $4.45 million and $0.28 for the quarter, respectively.
Street expects CWCO’s revenue and EPS for the fiscal year 2025 to grow 8.7% and 8.1% year-over-year to $150.95 million and $1.34, respectively. Moreover, the company has an impressive earnings surprise history, having surpassed the consensus EPS estimate in all four trailing quarters.
Over the past month, the stock has gained 2% to close the last trading session at $26.88.
CWCO’s POWR Ratings reflect its bright prospects. CWCO has an A grade for Quality. It has topped among the 13 stocks within the Water industry.
To see the other ratings of CWCO for Sentiment, Value, Growth, Momentum, and Stability, click here.
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YORW shares were trading at $31.42 per share on Friday afternoon, down $0.18 (-0.57%). Year-to-date, YORW has declined -3.97%, versus a 2.62% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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