Water sector as a long-term investment opportunity

In times of uncertainty, investors often turn to the less volatile sectors that are expected to record long-term and stable growth. Credit Suisse has selected two such companies for early October that allow for long-term growth.

The sector the bank is targeting is water. Suisse believes that investing in companies that address the challenges of water scarcity in the world can provide tremendous opportunities.

Both companies are Xylem and Pentair, both being attractive growth opportunities. However, it is interesting that the bank is not very optimistic in its official analysis, despite its recommendation.

However, Credit Suisse points to several factors that are on the water side, in addition to the bad ones:

• Low expectations of report estimates
• ROI below long-term historical levels
• Future demand for water is expected to significantly outstrip supply, with no significant infrastructure and technological improvements
• A powerful commercial factor to support growth for years to come

Xylem has maintained an ROI of 15% in recent years, with the company generating enough available capital to continue supporting its significant business investment. Credit Suisse's previous attitude was "neutral" to Xylem.

The next company, Pentair, is one of the most profitable companies in the sector globally, currently at historically low levels and at a discount. The company's management is focused on the search for new growth initiatives, the improvement of existing ones, and concentrates on water filtration. A 20% ROI speaks well for the company.

The company also trades at attractive prices and provides a good opportunity for long-term investment, according to Credit Suisse.

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