Evoqua Shares Continuing To Bubble With Multiple Growth Drivers

 

Investors have bailed out of many water stocks recently, but Evoqua (AQUA) has held up considerably better. As a company that is actually a good play on water quality (including water treatment and remediation), and not actually more of a play on construction, that makes sense. Even so, I’m not going to pretend that I expected the shares to be as strong as they’ve been – up almost 70% since my last article.

At this point, valuation remains challenging, but then I wouldn’t expect a company with above-average revenue growth and margin leverage potential to trade cheaply. Not only is Evoqua a good play on eventual PFAS cleanup spending, but the company is also well-leveraged to a wide range of growth markets and further growth in its outsource “water as a service” offerings.

 

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Evoqua Shares Continuing To Bubble With Multiple Growth Drivers

Evoqua Water Technologies Leveraged To Both Sides Of The Water Quality Equation

As a general rule of thumb, you don’t look to water/water technology companies to find bargains. With less-cyclical business models, leverage to water quality concerns, and the potential for increased federal support through regulation and infrastructure spending, they tend to trade at premiums to the wider multi-industrial space.

With that in mind, I’m not surprised that Evoqua Water Technologies (AQUA) shares look pricey by my typical investment standards. I do like the basic story here, though, including leverage to a “water as a service” business model and the potential for meaningful PFAS water clean-up mandates. If you’re less valuation-sensitive, or have some context for a 32x multiple to ’22 EPS as “cheap”, then there may be something here for you.

 

Read the full article here: 

Evoqua Water Technologies Leveraged To Both Sides Of The Water Quality Equation