Market Overview

California's Water Crisis Draws Investors

California's Water Crisis Draws Investors

As California struggles through a four-year drought that has left the state in dire need of both better water controls and a more efficient way to supply its residents, many investors are beginning to look for ways to capitalize on the growing demand for companies that can conserve and transport water.


After Governor Jerry Brown declared a state of emergency in January, the state began to focus its efforts on conservation and educating residents on ways to save the precious resource.

Related Link: California Drought Lesson: Do Not Take Water Supply For Granted

Since then, there has been a push in many communities to install water meters that measure the amount of water a particular residence is using. Companies that manufacture and install water meters, like Mueller Water Products, Inc. (NYSE: MWA) and Badger Meter, Inc. (NYSE: BMI), are likely to see a jump in sales as conservation takes priority.


While the environmental effects and sky-high costs of desalination have kept California from investing heavily in making sea water drinkable, many believe the state will eventually resort to more reliance on plants that do just that.

For that reason, long-term investment in companies like Xylem Inc (NYSE: XYL), which manufacture the equipment needed for desalination, could be a smart play.


Some investors are thinking outside the box and looking to alternative energy companies as the drought forces California to rely less on hydropower.

Many see solar as a great alternative, especially in California where sunshine is plentiful. For that reason, investors are looking to SolarCity Corp (NASDAQ: SCTY), the state's largest rooftop solar panel installer.

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