You probably take drinking water for granted, but its also the business of water stocks like Primo Water Corporation (NASDAQ: PRMW), Sodastream International Ltd (NASDAQ: SODA), Crystal Rock Holdings (NYSEAMEX: CRVP) and Lifetech Industries Inc (OTC: LTCH). To begin with, I should mention that the water industry itself is broadly diversified with water stocks that are involved in treating wastewater to stocks that provide chemicals to clean up water to stocks like the four just mentioned that are involved in providing various forms of drinking water. That later sector is more interesting as when you think about it, drinking water is no longer a commodity but increasingly its a branded product or service. After all, safety and taste are important considerations for consumers when they decide to find another drinking water option besides water straight from the tap.
With that in mind, here is a quick overview of major drinking water stocks:
Primo Water Corporation (NASDAQ: PRMW). Founded in 2004 by Billy Prim who also founded Blue Rhino, the market leader in propane grill cylinder exchange with over 29,000 retail locations in 49 states, Primo Water Corporation sells both traditional top-loading dispensers and bottom-loading bottle dispensers at retail locations nationwide. Primo Water Corporation recently surged from the $0.74 level to the $1.14 level when the company announced a three-year sales, distribution and licensing agreement with Cuisinart. Under the deal, Cuisinart will market and sell Primo Water Corporation's sparkling beverage appliances and other products in North America. In addition, Primo Water Corporation has just announced that Matt Sheehan has joined the Company in a newly created COO position where he will be responsible for overseeing the strategy and growth of PRMW’s water segment. Mr. Sheehan had most recently worked for Coinstar, Inc. (NASDAQ: CSTR) where he built up the Redbox business that Coinstar acquired in 2008.
Sodastream International Ltd (NASDAQ: SODA). Not exactly a pure play drinking water stock but close enough, Israel based Sodastream International is the world's largest manufacturer, distributor and marketer of Home Carbonation Systems that are sold in over 55,000 retail stores in 43 countries. Sodastream International’s system allows consumers to carbonate water and to flavor carbonated beverages at home as an alternative to purchasing pre-packed bottles or cans of water or carbonated beverages. The recent Primo Water Corporation announcement did send shares of Sodastream International down slightly as the deal has been called the "first legitimate competitive threat" to market share for the later. However and given that the market is still relatively new, that deal could raise awareness and popularity for everyone – including Sodastream International. In addition, Sodastream International will also be counting on advertising during the Super Bowl as well as on YouTube to boost revenue. And while Sodastream International’s product has been called a fad by some, its recent announcement of a 33% sales surge in Western Europe and a 145% sales surge in the Asia Pacific region seems to suggest otherwise.
Crystal Rock Holdings (NYSEAMEX: CRVP). The largest independent home and office distributor of its kind in the United States, Crystal Rock Holdings markets water, coffee and other home and office refreshment products throughout the Northeast under its subsidiary Crystal Rock LLC. Specifically, Crystal Rock Holdings bottles and distributes natural spring water under the Vermont Pure® brand while purified water with minerals added is bottled and distributed under the Crystal Rock® label. Back in early October, Crystal Rock Holdings had announced that it had recently acquired the assets of the Home and Office business of Frontenac Crystal Springs in Lewis and Jefferson Counties of New York and the Girard Spring Water Company in Providence, Rhode Island to further expand its market area and density in northern New York state and southern New England. Otherwise, Crystal Rock Holdings tends to be quiet on the press release front and its shares are lightly traded with an average of 6,000 shares a day being traded.
Lifetech Industries Inc (OTC: LTCH). A new player in the water business but one to watch, Lifetech Industries Inc’s Lifetech AirWell System is a highly advanced air to water generator that produces high quality water through filtering the condensation of moisture from air. That means Lifetech Industries Inc provides an alternative to both tap water and bottled water – which in many cases, is not much safer than the former plus it produces waste in the form of water bottles that need to be recycled (further using up energy and other resources). Lifetech Industries Inc’s Lifetech AirWell System currently produces a home/office unit that can generate approximately 15 to 30 liters of water per day, but the company’s technology is scalable and its currently in the process of developing customizable units to service the water needs of a variety of industries. All of the the product design, production and research and development is performed and managed by Lifetech Industries Inc’s strategic partner, Lifetech Japan Corporation; and the system itself use a 2-step purification process that delivers the purest form of water because its produced from air. Lifetech Industries Inc is planning to sell Air Well Systems to wholesale distributors, provide exclusive distribution rights to strategic partners in specified regions and provide exclusive licensing rights for air to water generation and filtration technology to strategic partners who can then manufacture and distribute Air Well Systems in specified regions of the world that lack abundant quantities of drinking water.
The Bottom Line. Investors should not take drinking water stocks like Primo Water Corporation, Sodastream International Ltd, Crystal Rock Holdings and Lifetech Industries Inc for granted as there could be opportunities in what is otherwise mistakenly viewed as just another commodity.