Mark Twain once said, "Whiskey is for drinking, and water is for fighting over", observes Brian Hicks, the president and founding member of Angel Publishing. Here, Hicks — along with junior market analyst Zachary Rosen — offer a favorite idea for 2022.
People go to war over water in places like Kenya, Pakistan, South Africa. But not in the United States — except when they do.
In 2001, the government cut outflows from the Klamath Basin along the California-Oregon border. Farmers attacked the canal gates with blowtorches. In 2018, another cutoff brought encampments of farmers and threats of violence. Last summer, it all happened over again. The cycle repeats, faster and faster. Soon it’ll be coming for us everywhere.
We’re accustomed to getting cheap, clean water right from our taps. So we don’t think about water very much, especially as an investment.
But as an investment, water has been one of the best-performing asset classes ever. In fact, our water investment for 2022 — Essential Utilities (WTRG) — has a total return of nearly 20,000% since going public in 1982.
Gold, for instance, has doubled in value in that same period. Gold is the ultimate safe haven, right? Well we think water is the ultimate safe haven and natural resource. As you read this, several U.S. states are currently in court battling access to water. And it won’t end. Ever.
Quenching our thirst is a fraught process. We need millions of miles of pipes, countless treatment plants, and the water sources themselves. All of it is precarious.
Look at Flint, Michigan, supplying its residents with toxic water. Look at the Colorado River, nearly dried up after twenty years of drought. Look at California, consumed by fire.
We need an estimated $1 trillion to update and maintain our water infrastructure, an expenditure we’re not likely to see anytime soon. Combine this with a 30% decrease in precipitation over the next fifty years and the future of water looks very insecure. That is why we advise investing in Essential Utilities, one of the best performing water utilities company in the country.
