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Investors Smell Opportunity in Flint's Stinky Water

February 5, 2016 12:33 PM EST

The Flint water crisis has left onlookers dumbfounded at the lack of competence among government officials and agencies. However, the crisis extends far beyond Flint. Each day new stories of high levels of lead being discovered in tap water across the country are coming to light. If anything positive comes out of the crisis, it will be that is has brought awareness that dilapidated infrastructure can impact you and your family silently in the security of your own home. Not only are municipalities looking at their water supplies but each individual homeowner should do the same.

You see, the lead poisoning of the Flint water is not the result of the water leaving the treatment center tainted, Calgon Carbon's (NYSE: CCC) spokesperson Dan Crookshank explains. Much of the problem is coming from the lead service lines, installed decades ago, which brings water from the street to the house. Therefore, treatment has to happen at the individual house level. Calgon Carbon confirmed that it does work with Flint, but said its activate carbon product is used to disinfect the water not remove lead. The spokesperson said the company doesn't expect a backlash or a windfall from the Frint crisis, although the company doesn't rule out exploring a lead removing solution in the future.

Therefore in Flint, good ole fashion hard work was required to install over-the-counter PUR and Brita filters in homes across the city. Over this past weekend, 300 plumbers from across the United States volunteered their time and skills to assist Flint residents with installing the filters and faucets. The efforts were coordinated by the United Associate union, with faucets being donated by Plumbing Manufacturers International, and filters being donated by the State of Michigan. New faucets were needed as the filters could not be installed on the decades-old faucets being found in many homes in the city. Plumbing Manufacturers International's CEO Barb Higgins said the company donated 700 faucets to the effort.

While the Flint crisis has huge humanitarian ramifications that should not be ignored or downplayed, investors should feel no need to apologize for looking for opportunity from the crisis.

The most obvious investment windfall is from the easy-to-use, over-the-counter filter companies – PUR and Brita – which are already being used in Flint. The filters remove 99% of the lead from water. Notably, PUR is a product of UR Water Filtration, from the Kaz division of Helen of Troy Limited (NASDAQ: HELE). Brita water-filtration products are marketed in the Americas by The Clorox Company (NYSE: CLX).

There is also antidotal evidence that some people are looking for more than just a basic over-the-counter water filter and are opting for a whole home filtration system. This comes from companies like Culligan, which is owned by private equity firm Centerbridge. Home Depot (NYSE: HD) and Lowes (NYSE: LOW) sell whole house water filters from companies like Aquasana and Ecodyne. Aquasana is owned by privately held Sun Water Systems and Eodyne is owned by Berkshire Hathaway (NYSE: BRK-A).

As noted above, for water treatment, although not related to lead, there is Calgon Carbon (NYSE: CCC). Potash (NYSE: POT) is also said to provide water treatment options.

Other publicly-traded water-related companies include: Consolidated Water (NASDAQ: CWCO), Watts Water (NYSE: WTS), American Water Works (NYSE: AWK), American States Water (NYSE: AWR) and Tetra Tech, Inc. (NASDAQ: TTEK).



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