05. October 2021 | 13:05 CET
Alphabet, Water Ways Technologies, TOMRA Systems: Return on investment with clean water and sustainability
Clean water is a human right for a reason. When precious water is polluted, diseases spread. Children and the elderly in particular suffer from water pollution. Geo-strategists are even expecting armed conflicts over water. For example, when huge rivers, which are often the lifelines of entire continents, become polluted and countries downstream suffer. We present three stocks that have something to do with water.
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ISIN: ALPHABET INC.CL C DL-_001 | US02079K1079 , Water Ways Technologies | CA9411881043 , TOMRA SYSTEMS ASA NK 1 | NO0005668905
Alphabet: How green is the tech giant really?
Alphabet is known as a tech company and operates Google, the most popular search engine, among other things. Alphabet is also present on our smartphones, thanks to the Android operating system. In addition, there are numerous services, around Office and also sports, fitness and health. Since all of these services are web applications, a large amount of computing power is required. And where there is a lot of computing, heat is generated. A large amount of cooling water is used to cool the data centers. Google, which likes to present itself as sustainable, is silent on the figures. The only clear thing is that the Company has budgeted a combined 8.7 million cubic meters of water for its data centers in three US states in 2019. The news agency Bloomberg Green reported this some time ago.
While there is likely little to no pollution of cooling water, Alphabet's example shows that even supposedly green companies can consume water on a grand scale. Given the numerous visions of the Company from Mountain View, it would be no wonder if they would take up the topic at some point. Currently, however, water hardly plays a role at Alphabet. Sales rose by almost 50% in the first half of the year, and profits increased by a staggering 167%. The stock remains exciting but is, of course, no longer a newcomer.
Water Ways Technologies: Small-cap water company with international customers
One such newcomer is Water Ways Technologies. The Company from Israel starts where most water is used and polluted: in agriculture. To this end, Water Ways Technologies offers irrigation and control systems. In this way, only as much water as necessary is used, and water is used efficiently. Water Ways currently has 400 customers in 40 countries. Most recently, the Company won three contracts worth a total of CAD 570,000. The projects in Mexico, Canada and China underscore the Company's international focus and great potential.
A study by Allied Market Research puts the market for smart irrigation systems at USD 1.44 billion in 2020. By 2027, the market is expected to grow to USD 5.57 billion. With its experience, Water Ways Technologies aims to secure a large share of that growth. "We are winning more and more contracts around the world, which speaks to our impressive reputation, global reach and track record as a leading provider of agricultural solutions for farmers and growers," commented Ohad Haber, Chairman and CEO, on the recent contract wins. With Water Ways already achieving significant increases in revenue and EBITDA in the first half of 2021 and the issue of sustainability and food becoming more acute as prices rise, investors may want to take a closer look at the share.
TOMRA Systems: Can deposit as a guarantor of returns
One stock that has created a market of its own with innovative technology is TOMRA Systems. Whenever someone brings deposit bottles into a German supermarket, there is a very good chance that a TOMRA vending machine will accept the empties and print the deposit receipt. TOMRA claims to have already installed more than 85,000 such machines worldwide. As more and more countries rely on deposit bottles, the number of new orders for TOMRA is not dwindling. Latvia, for example, recently opted for such a system. In the second quarter, sales at TOMRA increased by 27%. The order backlog also reached a new record.
That puts a company that has been a hidden champion for many years in an excellent position. Recycling is playing a growing role in more and more countries. Because of rising oil prices and the global attempt to save CO2, this trend will not decrease. TOMRA is ideally positioned and growing steadily. The only drawback is that the dividend is low, and the stock is already expensive.
While Alphabet is more of a water consumer and TOMRA Systems, as a market leader in its niche, is already actively followed by many market participants, Water Ways Technologies could strike a nerve in the current environment. Agriculture takes about 70% of the world's water, so it is a logical place to start. Such a small company with such an international footprint is hard to find. It is worth taking a closer look at the value.