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Invest In Water Part 13: Pennon Group, Another One Bites The Dust

Summary

I've been researching water stocks all over the world. Some have been incredibly interesting, others were a large disappointment.

Back in Britain, Pennon Group is clearly showing some potential, but the amount of red flags do stack up. Plus, it's heavily valued in comparison to United Utilities and Severn.

With the water market open for business in April 2017, I favor Pennon's competitors as they seem better positioned in contrast to Pennon Group.

The fact that Pennon Group takes most of its revenue out of Cornwall & Devon is worrying as both areas are economically deprived regions, under more scrutiny due to Brexit.

One of my favorite investment themes is water. For a variety of reasons (water scarcity, large population, droughts, wasting water and more), I believe water is an incredibly interesting investment theme. Due to these particular characteristics, I'm expecting water utility firms to be relatively safe from a risk/reward perspective.

The serious issues concerning water are straightforward and coming at the world at an incredible pace. We are all aware of problems such as water scarcity which is becoming increasingly worrisome due to the growing population on earth. This problem goes hand in hand with wasting water.

Either way, water is the circle of life and apparently a lot of people on this planet are lacking it. This builds an incredible investment theme going forward as it's unlikely that the water issues are being solved any time soon. We can live without an iPhone, but we can't without water.

So far, I've written 12 specific water-related investment articles on Seeking Alpha. The idea is to cover water utilities all over the world. This as politics, population, location and environment are all important factors when it comes to the potential of a water utility firm.

The previous parts are the following:

Article Nr.

Country of Coverage

Firm

Links

12

Brazil

SABESP

(here)

11

USA

American Water Works

(here)

10

United Kingdom

Severn Trent, United Utilities

(here)

9

(Article about hedging a water portfolio)

N/A

(here)

8

Japan

Kurita Water Industries

(here)

7

France

Suez

(here)

6

France

Veolia

(here)

5

USA

American Water Works

(here)

4

(ETF comparison article)

$PIO vs $PHO vs $FIW

(here)

3

(ETF article)

$PIO

(here)

2

(ETF article)

$FIW

(here)

1

(ETF article)

$PHO

(here)

Click to enlarge

With Pennon Group (OTCPK:PEGRF)(OTCPK:PEGRY), we have another candidate that bites the dust; will this one be finally the extraordinary one where water flows like blue gold? As Pennon Group is focused on Britain which I've covered before, it gives another chance to look at the privatized market in the UK for business clients which is about to open.

Pennon Group: Water Is Tasty, The Search For M&A Continues!

Pennon Group operates through 3 main entities: South West Water, Bournemouth Water and Viridor:

Source: Pennon Group

Bournemouth Water got recently acquired by Pennon Group for a relatively small amount of 100 million pounds. They bought it from SembCorp Industries (OTCPK:SCRPF), a small firm listed on the Singapore Exchange.

Source: Bournemouth Water

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