5 best Canadian water stocks to buy

Highlights

  • One of the companies mentioned below posted a return on equity of 54.53 per cent.
  • A Canadian firm in this list climbed about 358 per cent in the past year.
  • One of them held a P/B ratio of 14.08.

Water has now joined oil, gold, and other commodities futures on Wall Street. Around 71 per cent of the earth is water, however, only 0.3 percent of that water is clean and viable for use, which makes it a scarce resource.

The increasing demand for power and electricity has led to water shortages, which are likely to worsen the water and power crises around the world and that could be followed by inflation.

Governments and international organizations have been vocal about environmental protection and conservation goals. Many Canadian corporations are actively engaged in providing water treatment solutions and technologies to combat water shortages and challenges. These water-focused solutions providers could have bright futures.

Also read: 5 TSX stocks to buy in October ahead of holiday season

On that front, let us discuss a few Canadian corporations involved in the water solutions business.

5 best Canadian water treatment stocks to invest in

 

1.    H2O Innovation Inc. (TSXV:HEO)

H2O Innovation Inc. is a water treatment provider that leverages membrane filtration technology. The company offers water technologies and services, related specialty products and operation and maintenance services to municipal, energy and natural resource-end users across Canada, the United States, Spain, Saudi Arabia, and rest of the world.

The Quebec based company’s stock surged by nearly 55 per cent in the past one year, and closed at C$ 2.32 apiece, on Friday, October 1. The stock reached its 52-week high at C$ 3.70 on January 26.

The 197 million market cap company held a price-to-book (P/B) ratio of 2.495, a price-to-cash flow (P/CF) ratio of 29.10, and a return on equity (ROE) of 4.29 per cent.

2.    Global Water Resources Inc (TSX:GWR)

Global Water Resources Inc. offers fully integrated water management solutions, including water, wastewater, and recycled water utility services. The firm operates in the metropolitan area of Phoenix, Arizona.

The pure-play water resource firm held its stock at C$ 23.78 per share, on October 1, roughly seven per cent down from its 52-week high of C$ 25.75 reached on August 13. Its scrip rose almost 63 per cent in the past year, and approximately 15 per cent in the last six months.

Its P/B ratio stood at 14.08 with a return on equity of 7.89 per cent, from valuation front.

The company saw its revenue increased by 10.7 per cent to C$ 10.9 million in the second quarter of fiscal 2021 compared to the previous year. It also noted a net income of C$ 2 million in this quarter in comparison to a net loss of C$ 0.1 million incurred in Q2 2020.

The rise in net income was primarily due to the C$ 1.5 million received from the sale of a wireless communication tower, and partially due to increased revenue.

3.    Canadian Utilities Limited (TSX:CU)

The Calgary headquartered utility company provides gas and electricity services to residential, industrial and commercial customers across Canada, Australia, Puerto Rico and Mexico. An Atco Group subsidiary, Canadian Utilities offers affordable and sustainable energy solutions in Alberta.

CU’s scrip was roughly eight per cent below its 52-week high of C$ 37 (July 30), closing at C$ 34.20 apiece on Friday, October 1. However, on a year-to-date (YTD) basis, its stock had strengthened approximately ten per cent.

The company, in its latest quarter, recorded a hike of C$ 21 million in its adjusted earnings to C$ 115 million in Q2 2021 compared to the previous year.

At the time of writing, it held a profit-to-earning (P/E) ratio of 33.90, P/B ratio of 1.826, and return on equity of 6.8 per cent.

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4.    BluMetric Environmental Inc (TSXV:BLM)

The environment consultancy and engineering firm BluMetric Environmental Inc provides sustainable solutions to tackle critical environmental and water challenges faced by industrial sectors. The firm also serves governments at all levels with operations in Canada and other countries.

The Ottawa-based firm’s scrip soared about 358 per cent in the past year. However, on Friday, October 1, its scrip closed at C$ 0.71 per share down by almost 23 per cent from its 52-week high of C$ 0.92 (August 30).

The C$ 20 million market cap company held its P/E ratio at 5.5 and return on equity of 54.53 per cent on October 1.

The company posted revenue of C$ 8.5 million, in its latest quarter, higher from that of C$ 6.9 million in the same quarter of 2020. It also recorded an increased adjusted EBITDA of $1.3 million up from C$ 1.2 million in Q3 2020.

  1. Primo Water Corporation (TSX:PRMW)

Primo Water Corporation is a Tampa-based company that provides bottled water, water dispensers and water purification solutions under multiple brands. Apart from pure-play water solutions, it offers coffee services with businesses in North America, Europe and Israel.

The PRMW stock noted a surge of more than three per cent in the last nine months, and wrapped up trading at C$ 20.61 apiece on October 1. The stock had its 52-week high at C$ 22.75 on February 8.

With a market capitalization of over C$ 3 billion, Primo held P/B ratio of 1.965 and P/CF ratio of 12.30 on October 1.

The company noted a 15 per cent year-over-year (YoY) revenue growth to C$ 526 million in the second quarter of 2021. It also reported a 21 per cent hike in adjusted EBITDA to C$ 100 million in this quarter from that of Q2 2020.

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Bottom line

Water scarcity is linked to a power crisis, rising electricity prices, inflation hikes and many other economic problems. At the same instance, these water treatment firms with their sustainable technologies, products and services could draw the attention of investors who want to invest in water stocks, which may gain momentum in the future.

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