Why Xylem Inc. remains a solid play against the impending water crisis
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Why Xylem Inc. remains a solid play against the impending water crisis

According to the United Nations, water scarcity – not war – is a “rising cause for displacement” in Afghanistan. Given that approximately 1.5 million Afghans (around 4% of the population) have been displaced thus far, this is a crisis on an international level. Afghanistan is not alone, however: water shortages are occurring all around the globe, from full-blown crises in Cape Town and parts of India to droughts in California. A rising population, dwindling available water sources, and a more water-intensive lifestyle, means that water crises are a growing global phenomenon.

Xylem Inc.’s share price has appreciated by 7% so far this year

graph 1110 xylem

SOURCE: Yahoo Finance

There are a number of ways that the world can combat water scarcity – but none of it is sufficient to do so alone. Desalinisation, for example, converts sea water to drinking water – but it comes at considerable financial and environmental cost. Meanwhile, better infrastructure can help retain water that would otherwise be wasted – but it can’t provide more water for a growing global population. The only feasible answer to the problem is to use all methods together.

That’s where global water technology company Xylem Inc. comes in. Xylem is a market leader in all these areas, and splits its business between three core divisions. Its water infrastructure segment deals with collecting water, treating it, and transporting it to users. Its applied water business sells pumps and other technological products to the residential, commercial and industrial sectors. Driven by urbanisation, this remains its biggest business. And its measurement and control solutions division deals with advanced tech to monitor water use and conservation, such as smart metres, data analytics, and networked communication devices.

In a recent press release, Ron Askin, the company’s vice president of sales in water utilities, highlighted the importance of collaboration to address water challenges: “Addressing today’s water challenges requires innovative solutions, and it is more important than ever that all stakeholders – the private sector, municipalities and community leaders – work collaboratively to enhance the resilience of our utilities.” As Xylem continues to offer the leading comprehensive water technology service in the world, it is increasingly looking like a company that others will have to collaborate with to save the world.

Disclosure

Dominion holds Xylem Inc. in its Global Trends Managed Fund


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