Mueller Water Products, Inc. (MWA)

Hoglum (27.58) Submitted: 2/02/07 11:03 AM : Start Price: $14.54 MWA Score: -25.58

This looks like a story of pure demand to me. I don't believe you can get a much more inelastic demand than that of human water supply. Here's a company well positioned to meet that need. According to the US Environmental Protection Agency, "much of the water infrastructure in the US was built over 30 years following World War II". They go on to state that there's going to be some serious rehabilitation and replacement in the near future. This found here: http://www.epa.gov/waterinfrastructure/. Our systems are old and decaying and absolutely must be replaced over the next several decades. The EPA states that pipe systems have life cycles that range from 15 to over 100 years, depending on the type of material used. The longer lasting pipes are steel which is rarely used anymore. The bulk of more recently installed pipes are made from different materials, which fail much sooner. There's no choice here. Without a proper water system, we cannot live. Mueller Water Products has only just begun their work. They currently operate mainly east of Illinois in the US and are expanding in a selective, managed manner.
This brings me to another point. They plan on expanding internationally. According to their website, they've broken the ice in both Canada and China. It's the China part of this which interests me. Not necessarily just China, but that entire region of the world. Many countries ranging from North China and Mongolia to Central and South/Southeast Asia don't have adequate water systems to support their growing populations. The United Nations General Assembly resolution 58/217 from 12/23/2003 declared 2005-2015 the International Decade for Action, "Water for Life". "Population growth between 1950 and 1995 caused the per capita availability of water to drop almost 70 per cent in South and Central Asia, 60 per cent in northern China and Mongolia, and about 50 per cent in South-East Asia." Something has to be done about this, and with the right strategy, Mueller Products stands to profit tremendously. The growth potential here is enormous. Mueller is making profits, is positioned to take advantage of superior long term trends, and operates in an industry which involves a demand that is absolutely essential to human survival. WOW! There's more but I don't want to slip into a 63 second pitch. Just providing a little brain chow for all you solidified bags of water reading this.

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