View Full Version : Water

12-09-2005, 10:58 AM
Cramer was pumping PHO... a new Water ETF last night... here's his thoughts...

A natural resource even more scarce and precious than diamonds is water, said Cramer. That may seem counterintuitive, since 70% of the earth's surface is covered by water. But it costs money to make fresh water potable, and desalinization has yet to become economical on a large scale.

Water consumption in the 20th century has grown at twice the rate of population growth, Cramer said, and over the next 20 years, even the most conservative estimates expect hundreds of billions of dollars will be spent on water infrastructure. Cramer owns Aqua America (WTR:NYSE), which operates public water utilities in a number of cities, but Aqua America "doesn't expose you to the massive nature of our water shortage," he said.

A "brilliant way to play the water shortage" is through an ETF, PowerShares Water Resources (PHO:NYSE) Cramer said. PHO, which just launched this week, is composed of 64% small-cap stocks, but also contains large companies such as Suez (SZE:NYSE) and Veolia Environnement (VE:NYSE).

Don't pay up for PHO, though, said Cramer. An ETF is simply a basket of stocks trading as one stock.

In response to a question about an international water play, Cramer said Suez would be the way to play it.

Cramer also said that Walter Industries' (WLT:NYSE) plan to spin off its water business is a great idea.

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12-09-2005, 01:46 PM
I think water utilities will not appreciate much with a rising cost of water, any more than electric utilities would benefit from a rising cost of coal/oil/natural gas. Particularly in the developing world, if the cost of water increases, these utilities will be lucky to even pass on their increased cost to their customers. Politics and regulations will likely squeeze their margins in an attempt to hold consumer costs down.

A better play would be companies developing desalinization technologies or other methods to increase the supply of potable water. Anybody know any publicly traded companies doing this?