Mueller: Growth Guru Dips into Water
04/24/2015 7:00 am EST
You’ve probably been seeing more and more headlines on the worsening drought in California, explains Chris Versace, editor of Growth & Dividend Report.
But the reality is the magnitude of the situation is far greater than the mainstream media is portraying.
Per the US Drought Monitor, 59% of the continental United States is in some stage of drought conditions. This compares to 47% just three months ago.
As we move from the remnants of winter into spring and summer months, this situation is bound to get worse before it gets better and I want you to profit from this pain point.
Meanwhile, the American Society of Civil Engineers has given a D rating to our water infrastructure system in this country. As I see it, the situation in California could very well prove to be the lightning rod for water infrastructure spending.
The potential opportunity is so big I want you to add Mueller Water Products (MWA) to your holdings.
Mueller Water, which manufactures and markets pipe and flow control products and services for use in transmission, distribution, and measurement of water in the United States, Canada, and internationally.
Mueller has roughly a 40% share of the market for valves used in water distribution and about a 50% share for fire hydrants.
Between Canada and the United States, the company derives more than 96% of its revenue from these two regions (88% in the United States), which means little to no dollar impact.
Recently, Oppenheimer launched coverage on the company with an Outperform rating and a $12 price target. But given the strong tailwind, I see more upside than that over the coming 12-24 months.
If the market gets a bit bumpy and MWA shares experience some weakness, you should be buying the shares aggressively the closer to $9 they get.
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