Hold or sell? 5 stocks under radar as UK plans to fine water firms

Highlights

  • A major investigation into sewage treatment works has been announced by the EA and Ofwat.
  • This came after many water companies acknowledged that illegal amounts of sewage were being released into water bodies by them.
  • The EA asked all water companies for installation of new monitors to keep a check on the levels of wastewater being treated prior to letting it overflow into rivers or coastal waters.

A major investigation into sewage treatment works has been announced by water regulator Ofwat and the UK Environment Agency (EA). This move has been announced after many water companies acknowledged that illegal amounts of sewage are being released into rivers and watercourses by them.

Over 2,000 sewage treatment works would be under scrutiny in the investigation. The companies which will fail to comply with the legal permits would be fined or prosecuted. According to the EA, there could be an unlimited fine in criminal proceedings, while for civil cases the fine could be up to 10% of the company’s annual turnover.

Installation of new monitors was demanded by the EA at all sewage treatment works. However, many water companies disclosed that the current requirement of the EA can’t be met by their sewage treatment works. These monitors would be required to keep a check on the levels of wastewater being treated prior to letting it overflow into rivers or coastal waters.

This is a crucial move as many companies release the wastewater directly into the water bodies to prevent the pipes from getting overloaded during the times of storms or heavy rains. All water and sewage companies in the UK will be a part of this investigation to analyse the scale and intensity of the issue.

RELATED READ: Are these 3 dividend-paying water stocks still a good buy?

Let’s take a look at some of the water companies in the UK which may be impacted by the news.

Severn Trent plc (LON: SVT)

England-based Severn Trent plc’s current market cap of the FTSE100-listed company stands at £7,012.70 million. It has given a return of 12.53% in the last one year. Severn Trent plc’s shares were trading at GBX 2,802.00 at 8:01 AM on 19 November 2021 (GMT).

United Utilities PLC (LON: UU)

Warrington-based United Utilities PLC’s current market cap of the FTSE100-listed company stands at £7,217.79 million. It has given a return of 14.28% in the last one year. United Utilities Group PLC’s shares were trading at GBX 1,058.50 at 8:02 AM on 19 November 2021 (GMT).

Pennon Group plc (LON: PNN)

England-based Pennon Group plc’s current market cap of the FTSE250-listed company stands at £3,323.17 million. It has given a return of 17.88% in the last one year. Pennon Group plc’s shares were trading at GBX 1,212.00 at 8:03 AM on 19 November 2021 (GMT).

RELATED READ: United Utilities (UU.) and Severn Trent (SVT): 2 water stocks to buy

Water Intelligence plc (LON: WATR)

Covering residential, commercial and municipal customers, Water Intelligence plc offers precision leak detection and remediation solutions. It is a constituent of the FTSE AIM All-Share index. The current market cap of the company stands at £220.57 million. It has given a return of 155.02% in the last one year. Water Intelligence plc’s shares were trading at GBX 1,270.00 at 8:03 AM on 19 November 2021 (GMT).

Bristol Water plc (LON: BWRA)

Bristol Water plc supplies drinking water to more than a million people, while Wessex Water provides sewerage services in Bristol. The current market cap of the company stands at £20.38 million. It has given a return of 0.51% in the last one year. Bristol Water plc’s shares were trading at GBX 163.00 at 8:04 AM on 19 November 2021 (GMT).

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