Q: Hi,
I hold CWW and have decided I'd like to instead concentrate my "water" holdings on two stocks: AWK and XYL. Are there any obvious red flags with these two companies? I know there is no comparison between and ETF and individual stocks.
Thank you. Michael
I hold CWW and have decided I'd like to instead concentrate my "water" holdings on two stocks: AWK and XYL. Are there any obvious red flags with these two companies? I know there is no comparison between and ETF and individual stocks.
Thank you. Michael
5i Research Answer:
The top two holdings of CWW include AWK (8.1% weighting) and XYL (8.0% weighting).
Between AWK and XYL, both are very similar in market cap size. XYL is expected to show faster sales and earnings growth next year, and has slightly outperformed AWK over the past 10 years. XYL has a better debt structure and liquidity profile, however, AWK has a strong net profit margin. Both are valued at similar multiples, however, AWK pays a higher yield of 2.4% against XYL at 1.5%. We like both names and feel that they are leaders in the water industry.