Xylem: Smart Meters to Clean Water

04/14/2017 2:50 am EST


Stephen Leeb

Founder and Research Chairman, Leeb Group

Water has long been the commodity most often taken for granted, but that’s changing as freshwater supplies around the world become strained and polluted, explains Stephen Leeb, growth stock specialist and editor of The Complete Investor.

A study last year by Science Advances found that around 4 billion people — roughly 66 percent of the world’s population — experience severe water scarcities at least one month of the year. For half a billion people, it’s a year-round crisis.

Xylem (XYL) designs and manufactures products, such as pumps and various controls, that conserve and transport water and test and treat wastewater. It serves industrial, commercial, residential, and agricultural markets in more than 150 countries.

This past August, in a move that should help propel growth for years to come, Xylem acquired Sensus, a provider of smart meters, network technologies, and advanced data analytic services to the water, electric, and gas industries. Sensus has more than 80 million meters installed wordwide.

Xylem’s growing footprint in foreign markets is an essential part of its growth strategy; China is a particular focus. Much of this growth could be generated by Xylem’s Wedeco technology, which uses ultraviolet light to disinfect water.

A water treatment plant in Shanghai already uses this technology, and the company hopes to expand Wedeco sales throughout China.

Given that China’s government has reported that 60 to 80 percent of the country’s surface water is polluted, the growth potential is considerable.

As befits a growth recommendation, Xylem uses its cash primarily to stoke future growth — funding acquisitions, research, and new product development.

This kind of focused dedication to long-term growth by a company strongly positioned in one of the world’s most critical arenas makes Xylem a quintessential choice for growth investing.

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