Occasional Capital Markets Commentary: Diversity of Performance

The water industry displays a diversity of performance within its sectors.

The water utility sector remains the strongest performing segment of the water industry.  The leaders are California Water Services (CWT) followed by American States Water (AWR) whose current stock prices stand 11.6% and 3.7%, respectively, above their respective expected prices.  The laggards are San Jose Water (SJW) and American Water Works (AWK) whose current stock prices stand 10.3% and 6.3% below their expected prices.

Exchange traded funds is the second strongest performing segment of the water industry.  Global funds are over-performing and domestic funds are underperforming.  The current stock price of Powershares Global ETF (PIO) stands 9.2% above its expected price while the current stock price of Guggenheim S&P Global Water stands 1.2% above its expected price.  While the domestic ETF’s were over-performing historically, they are now under-performing.  The current price for First Trust ISE Water (FIW) stands at 6.9% below its expected price.  The current price for Powershares Water Resources (PHO) stands at 6.0% below its expected price.

The resource development firms remain the weakest performance segment of the water industry.  Again, there is diversity in performance.  PICO Holdings (PICO) stock price is 7.7% above its expected price.  Cadiz Company (CDZI) stock price is 23.8% below its expected price.  This diversity of performance may reflect that PICO’s activities are relatively free of the politics and controversy surrounding the Cadiz Valley Water Conservation, Storage and Recovery Project.

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Written by Rodney T. Smith, Ph.D.