One of my criticisms about the typically richly-valued industrial water sub-sector is that many of these companies aren't especially well-leveraged to real pain points in global water - namely, ensuring adequate supplies of clean drinking water. Leak detection, condition monitoring, advanced metering, and basic infrastructure (pumps, valves, et al) certainly have their place, but I think Franklin Electric's (NASDAQ:FELE) focus on groundwater pumps and growing focus on water treatment/quality sets it apart.
These shares have outperformed other water stocks like Mueller (MWA), Watts (WTS), and Xylem (XYL) by pretty meaningful amounts since my last update (around 20%, 15%, and 35%, respectively), though the shares are only up slightly in absolute terms (and Evoqua (AQUA) has done even better). Given the company's performance since that last update, including strong pricing power, I'm more bullish on the shares and the valuation today.
Read more here:
Franklin Electric Offers Leverage To Real Pain Points In Water
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