Normally, fire hydrants would not sound like a compelling investment target. But after the horrific scenes of the Los Angeles wildfires tearing through some of the richest and most beautiful neighborhoods in the country, cities everywhere are reassessing their firefighting infrastructure.
Mueller Water Products is a leading maker of fire hydrants and components designed to manage and monitor municipal distribution of water and gas.
In addition, water supply crises in places like Flint, Michigan and Pritchard, Alabama spurred many cities to update aging infrastructure. Add to that the general water supply shortages that make monitoring and leak prevention paramount, particularly in the Southwest.
Also good to consider is that demand comes from new construction on the industrial side: data centers, chip fabs and new factory sites.
Mueller's revenue rose 3% last year to $1.32 billion. Company revenue is spread fairly evenly around the U.S., with about 5% of total revenue coming from sales in Canada in 2024.
Mueller's top competitors in the fire hydrant business, McWane, Inc. and American Cast Iron Pipe Company, are private companies. Mueller also designs and manufactures heavy duty iron gate valves, leak detection and gas monitoring technology.
Analysts forecast healthy earnings growth for 2025-26, starting with a 21% gain this year. Analysts targets a 5% gain in revenue, according to FactSet.
MWA Stock
Mueller Water stock has managed no fewer than six breakouts since February 2024. Each breakout has been followed by a pullback into a base, making the stock somewhat challenging to hold.
Over that period, the stock has lodged a 69% advance.
Now, MWA stock is trading just below a 28.25 buy point for a six-week flat base. The entry matches Mueller's record high from Feb. 6.
Shares have advanced 25% so far this year as the rest of the market has pulled back near correction territory.
Mueller Water Products has a 21-Day ATR of 3.21.
The average true range is a metric available on IBD's MarketSurge charting tool. It gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
In the current, unpredictable market, IBD suggests stocks with ATRs of 3 or below.
