Globally, there is recognition of the challenges of costly pipeline failures, water loss, and environmental concerns, and there are growing government regulations to address these pipeline infrastructure issues.

Pure Technologies Ltd. (TSX:PUR), a global leader in the development and application of innovative technologies for the inspection, monitoring, and management of physical infrastructure (mainly water pipelines, but also oil and gas pipelines), is thriving due to the following trends: rapidly aging infrastructure, water scarcity, rapidly emerging economies, and increasing government regulation.

More about Pure

Organic growth at Pure has been strong. In 2014 organic growth was 23%, while overall revenue growth was almost 28%. In the last few years the company has been working on diversifying its business across geographies as well as across segments.

In 2014 52% of revenue was from the United States, 23% from Canada, and 25% from International markets. Recently, the company completed two acquisitions, one in the water segment and one in the oil and gas segment, that are complementary and serve to diversify and strengthen Pure’s position in these two segments.

Water and wastewater segment

According to Environment Canada, more than 20% of treated water never reaches its destination due to leaks and major disruptions in water pipelines.

The acquisition of Wachs Water gives Pure an established customer base in the small- to medium-sized utility space, and as Pure currently works with only 5% of the 1,000 medium-sized utilities, it will significantly increase the company’s customer base. It will also broaden Pure’s service offering, as Wachs Water provides complementary services like flow management and maintenance services, and therefore will also result in significant cross-selling opportunities.

Oil and gas segment

According to the company, there is approximately 500,000 miles of hydrocarbon pipeline in North America that requires regular inspection. There is increasing scrutiny and regulation on underground infrastructure and its impact on the environment.

The HM acquisition adds over 200 new clients to Pure with no overlap, and will be a catalyst for this segment. Pure will also make use of HM’s intellectual property and experience as a cost-effective provider in order to increase its offering and improve overall performance and efficiencies.

As a barometer of success, HM turned down work in the fourth quarter of 2014 because the company did not have the resources to meet demand. Now that HM is a part of Pure, it will be easier for the combined company to meet the demand. Management expects strong growth in this segment.

Pure Technologies trades at over 30 times 2015 expected EPS, so it is not a cheap stock, but the macro and driving forces in its business are strong. The company’s no-debt balance sheet, strong cash flow in 2014 and expected strong cash flow in 2015, and strong liquidity, are all good signs for the stock.

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Fool contributor Karen Thomas has no position in any stocks mentioned.