Water, Water Everywhere ……

Alternative energies like fuel cells, electric cars, windmills, solar power, manure power, etc. get the lion’s share of attention, but is there anything more critical to the environment than clean water?

About $4 billion in stimulus funds is being sent to states for wastewater infrastructure projects in the form of grants, low-interest loans and principle forgiveness. Another $2 billion will go toward drinking water infrastructure. New York State will receive nearly $437 million for wastewater infrastructure projects to protect lakes, ponds and streams – the single largest grant in the EPA’s history. http://www.greenbiz.com/news/2009/04/13/stimulus-money-reduce-diesel-emissions-water

The $6 billion in stimulus money is a (get ready) drop in the bucket compared to the $334 billion in water infrastructure investment the EPA estimates is needed over the next 20 years. There are an estimated 240,000 water main breaks each year in the United States. Breaks not only waste millions of gallons of clean, treated drinking water, but also can cause tremendous damage.  Thanks for playing along Baltimore.  http://www.bizjournals.com/baltimore/stories/2009/04/27/daily16.html

And let’s face it. No politician ever lost an election because he allocated funds to clean up his district’s drinking water. Acording to a recent  New York Times article, the state of Ohio asked its mayors and city managers for suggestions on how to spend its stimulus money –  there were 1,400 requests for drinking water projects costing a total of $3 billion.

Sterling Construction (Nasdaq:STRL), http://www.sterlingconstructionco.com, engages in the building, reconstruction, and repair of transportation and water infrastructure in Texas and Nevada. It so happens that Texas is getting the largest percentage of funds for drinking water infrastructure. http://www.epa.gov/safewater/dwsrf/allotments/funding_dwsrf_allotments_arra.html  This is one of the rare stocks that is trading ($19.55) nears its 52 week high ($21.25) and way up from its low of $8.85. Pass on this stock if you are a market timer in search of a short term run. Recent momentum may be attributed to a profile by the nation’s most read stock writer, Gene Marcial of BusinessWeek. You may want to watch and wait to see if the Marcial effect wares off a tad and the short term money crowd moves onto a new object of affection.

Gorman Rupp (Amex:GRC), http://www.gormanrupp.com, of Mansfield, Ohio provides pumps for use in the construction, industrial, sewage, and waste handling fields. Similar to almost all capital goods vendors, 2008 was not a stellar year. However, CEO Jeffrey Gorman’s quotes in the latest earnings release suggest he is confident that the aforementioned stimulus money will (ahem) trickle down to his firm’s bottom line. “We remain optimistic that the infusion of Federal stimulus dollars targeted toward water, wastewater and other infrastructure projects will be positive for some of the markets we serve.” The Company has an order backlog of $91.8 M and no debt and just announced a .10 cent dividend. At $20, the stock seems to be at an attractive entry point. 52 week low/high is $14.50/$46.50.

TRC Companies, Inc. of Windsor, CT. (NYSE:TRR), www.trcsolutions.com, provides technical, financial, risk management, and construction services for infrastructure projects all over the United States. The Company’s water and wastewater planning and management division includes nationally recognized leaders in hydraulic engineering and hydrology, and TRC has become industry-known for its innovative capabilities in water and wastewater planning and management. CEO Chris Vincze’s operational turnaround plan and focus on both sustainable infrastructure were on track prior to the coming availability stimulus funds. This may create some additional opportunity as the TRC valuation was crushed in recent years and there are reasons to believe they are well positioned for a green economy and to be the beneficiaries of infrastructure stimulus.

Kadant Inc. (NYSE:KAI) of Westford, MA, www.kadant.com, supplies equipment to the global pulp and paper industry.  Kadant water management systems maximize water efficiency, helping companies reduce operating costs and comply with environmental requirements. Its expertise in this area has also been used to optimize production in the steel, rubber, plastics, food, and textile industries. It has traded between at $11 and $12 over the last month and a half (low$6.50, high $28.92) and reports 1Q results on May 6th.

Two tiny firms in the wastewater arena that might be worth taking a flier on are Enviro Voraxial Technology (EVTN.OB) Sionix Corp. (SINX.OB). Ft. Lauderdale-based Enviro, www.evtn.com, markets a machine that separates water from other elements such as oil, industrial particles, etc. A case study with the Hillsborough Wastewater Treatment Plant demonstrated “continuous in-line removal of grit from screened wastewater at rates up to 8000 gallons per minute.” You do realize what this means don’t you? Well, um, me neither. The Company’s online marketing collateral explains that this performance data “demonstrates separation performance which exceeds present state -of -the -art.” I’ll buy that. Anaheim’s Sionix, www.sionix.com, develops dissolved air flotation (DAF) technology for drinking water and wastewater treatment systems for municipalities and industrial use. The market cap is $19M and the stock trades at .15, but it seems to have a following. Average volume is 130K, but it saw tremendous activity on the date of this writing (April 24) with 575K shares traded.

Perhaps word leaked that the company would be mentioned in smallcapnews?


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s