The S&P/TSX Composite Index was down 99 points in early afternoon trading on July 5. Meanwhile, the S&P/TSX Capped Industrials Index was down just shy of 1% during the same trading period. It looks like a good time to go value shopping. Today, I want to focus on three TSX stocks that are poised for big growth in the water space.
Fortune Business Insights recently valued the global water and wastewater treatment market at US$301 million in 2022. The same report forecasts that this market will deliver a compound annual growth rate (CAGR) of 7.5% from 2022 through to 2030, capping the market value out at US$536 billion. This is a market that is well worth seeking exposure to.
This undervalued water stock is geared up for big earnings growth
H2O Innovation (TSX:HEO) is a Quebec City-based company that designs and provides integrated water treatment solutions based on membrane filtration technology. Shares of this TSX stock have jumped 12% month over month at the time of this writing. The stock has surged 31% so far in 2023. Investors can see more of its recent performance on the interactive price chart below.
This company released its third quarter fiscal 2023 earnings on May 11. H2O Innovation delivered revenue growth of 31% to $68.4 million. EBITDA stands for earnings before interest, taxes, depreciation, and amortization (EBITDA). The company reported adjusted EBITDA of $6.9 million in the third quarter of fiscal 2023 – up from $5.3 million in the third quarter of fiscal 2022. Moreover, its consolidated backlog climbed 86% to $202 million.
Shares of this TSX stock are trading in favourable value territory at the time of this writing. H2O Innovation is geared up for very strong earnings growth going forward.
Here’s a utility stock that offers a super dividend
Algonquin Power & Utilities (TSX:AQN) is an Oakville-based renewable energy and utility company that provides energy and water solutions and services in North America and around the world. Its shares have dropped 3.7% over the past month. However, the stock is still up 21% in the year-to-date period.
In the first quarter of fiscal 2023, Algonquin Power & Utilities delivered revenue growth of 6% to $778 million. Meanwhile, adjusted net earnings were reported at $119 million, or $0.17 per share – down 15% and 19%, respectively, compared to the prior year. Adjusted EBITDA increased 3% year over year to $341 million.
This TSX stock is trading in solid value territory in early afternoon trading on July 5. Algonquin offers a quarterly dividend of $0.108 per share. That represents a strong 5.1% yield.
Why Primo Water is on my radar in early July 2023
Primo Water (TSX:PRMW) is the third and final TSX stock I’d look to snatch up in the water space today. This Tampa-based company provides pure-play water solutions for residential and commercial customers. Shares of Primo Water have dropped 22% so far in 2023.
In Q1 2023, Primo Water delivered revenue growth of 4% to $547 million. The company reported adjusted net income of $15 million, or $0.09 per share, which was mostly flat compared to the first quarter of fiscal 2022. Primo Water achieved adjusted EBITDA growth of 8% to $95 million.
Shares of this TSX stock are trading in attractive value territory compared to its industry peers. It offers a quarterly dividend of $0.08 per share, representing a 2.6% yield.
