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How to Dip Into Clean Water Stocks

NEW YORK ( TheStreet) -- Providing clean water to all is a significant global challenge as nearly one billion people lack access to clean water.

The United Nations and organizations such as are working to address this problem.

There are also plenty of companies that have designed or are developing products and services used in water treatment. In my role as a market strategist, my focus is on identifying companies in this sector that are worthy investments.

Unfortunately, there is very little Wall Street research coverage of companies in this field.

The companies that have water treatment as their main business focus are in the "Utility - Water Supply Industry," and the research reports I read covering specific stocks in this industry tend to analyze 10-K and 10-Q quarterly filings with little commentary on product development and milestones achieved.

I evaluate these stocks using the ValuEngine Valuation and Forecasting Models, the technical charts and value levels, pivots and risky levels from my proprietary analytics.

I have selected the ISE Water Index (^HHO) (recently at 86.23) as a benchmark for the industry. Below is the the weekly chart. The technical momentum (12x3x3 weekly slow stochastic) reading is declining at 29.67 on a scale of 00.00 to 100.00.

The index ended last week below its five-week modified moving average at 87.41. These two technical indicators make the weekly chart profile negative. The chart shows numerous tests of the 200-week simple moving average, now at $75.84, which is the downside risk for the water treatment industry.

chart courtesy of Thomson/Reuters

Here's how to interpret ValuEngine Data: The Valuation column shows the percentage undervalued or overvalued for each stock, where a red number is undervalued and a black number is overvalued. N/A means not available.

VE Rating: A 5-Engine Rating is a Strong Buy, a 4-Engine Rating is a Buy, a 3-Engine Rating is a Hold, a 2-Engine Rating is a Sell, and a 1-Engine Rating is a Strong Sell.

Last 12-Month Return (%): Red is lower, Black is higher.
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