Aqua America, Inc. (WTR)

Presently Aqua America suffers from the "Diamonds vs Water phenomenon". Diamonds are incredibly expensive, but good for little. Yet water is a life necessity in decreasing supply, and incredibly cheap. Eventually this will reverse, and as an investor in WTR, I believe that time is coming soon.

As record droughts continue to increase their tools, well managed water utilities will have the freedom to raise prices under the simple supply / demand principal. Secondly, as the green movement continues to take foothold, companies with a track record to acquire and integrate new technologies / businesses will be the survivors. Aqua America is king of the road at successful acquisition integration.

Infrastructure must be replaced and grow to meet rising demand. If Aqua America had to pay for this outright, I'd be concerned, but at some point Uncle Sam will have no choice to step in and supply funding for massive overhauls of water / sewage infrastructure. Both public and private utilities will benefit from this b/c it will provide them the opportunity to make their operations more efficient, while bringing the issue of water's importance to the national front page - creating more demand for it's stock.

This appears to me to be a good recession proof play. People will not get their water shut off. If the economy slows, it slows the rate at which Aqua America has to expand infrastructure, allowing them to spend cash on exisiting infrastructure, and getting them ahead of the competition. If the economy grows, so will rate increases and in either scenario, opportunities for M&As will continue to abound.

As Aqua grows it can benefit from economies of scale and eventually brand recognition. The key is management.

Regardless, I believe this is a long term play that will offer high growth down the road, but not a stock for the day trader or impatient.

Please reply so that we can all increase our collective knowledge.