As the go-to name in commercial and residential water filtration, Pentair has a big economic moat over rivals trying to break into the market. Filtration is a quality over cost business; in other words, customers are more elastic to pricing changes as long as they know that their water is being filtered well -- that, and the huge sunk costs of switching filter types, has give PNR sticky revenues. And since filters are consumables, those sales tend to be recurring too.
PNR's industrial pump and valve business has been growing on the heels of filters. In recent years, PNR has embraced non-industrial revenues like those from the food and beverage industry, capitalizing on a market that's used to spending a premium for cleaner water. Pentair doesn't carry much balance sheet liquidity, but that's due in part to how much cash PNR consistently generates from operations. With that cash number ticking higher, the firm looks likely to announce a dividend hike in the next quarter.