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Dykstra: Swimming With Aqua America

The water firm's growth potential makes it a solid play.

After a brief foray into the technology sector with my last two columns, it's time to focus on natural resources again. This time the natural resource is not oil or natural gas but our most basic and overlooked one: water.

Water shortages out West have been getting a lot of media attention, and as cities continue to sprout in more arid climates, the lack of water will provide increasingly higher burdens for metropolitan growth -- a situation that could create investment opportunities.

Today's pick,

Aqua America

(WTR) - Get Aqua America, Inc. Report

, has a limited presence out West, but the company's business model and outstanding CEO make it an excellent opportunity.

The company provides water or waste-water services to customers in 13 different states, with the majority of its revenue coming from Pennsylvania. In January 2007, Aqua America completed its purchase of the New York Water Service, providing a vast new market for the company; it's just the latest in a series of nearly 200 joint ventures and acquisitions over the past 10 years.

The abundance of acquisitions and agreements has allowed Aqua America to fatten its profit margins and grow quickly. As federal water-quality standards continue to tighten, existing infrastructure must be replaced in many localities. Smaller companies cannot afford the drastic overhaul necessary; through its size, continued acquisitions and keen management by its CEO, Nick DeBenedictis, Aqua America has gained a remarkable advantage in this area.

With the spate of new regulatory measures, the industry faces unique challenges in dealing with these increased costs. Water is tightly regulated by both local and federal offices. In order to implement a price increase, utility companies must have the capacity to withstand significant regulatory lag until the higher prices are approved.

DeBenedictis expects many of these increases to go into effect during the next couple of years, providing a significant boost to Aqua America and its shareholders, and that's why this is today's trade idea.

Aqua America closed trading Monday at $22.84. I will place a limit order to buy 10 contracts of the September 20s (WTRID) for $3.30. As a reminder, in order to ensure that a gain is realized, once that order is filled I will immediately place a good-till-canceled sell order $1 above my purchase price; this guarantees that gains achieved on paper will make their way into our pockets. Speaking of "making sure the gains make their way into our pockets," tomorrow I will be updating the Portfolio Scorecard. I believe you all will be pleasantly surprised; stay tuned!

TheStreet Recommends

Game of Life

We often hear stories of incredible human feats and marvel at the seeming impossibility of these accomplishments.

We learn incredibly complex math equations and ponder how anybody could have the time or curiosity to discover them. We see videos of men lifting cars and dragging tractor trailers and wonder how anybody could have the strength or determination to pull it off, literally. Adrenalin? I'd say so.

Just days ago, Martin Strel succeeded in swimming the length of the entire Amazon River. The journey lasted 65 days until it ended near Belem, Brazil. Strel averaged about 50 miles a day, almost twice as long as the length of a marathon. The Slovenian battled to avoid the vicious piranhas, the bloodsucking toothpick fish and the bull sharks that call the Amazon River home.

He had to be pulled out of the water on more than one occasion because of over-exhaustion and delirium. Despite doctors' orders not to swim, Strel insisted upon night swimming to finish the course. Strel developed second-degree burns on his body from the friction of the wetsuit against his skin. The arduous voyage knocked 26 pounds off his figure, although I do not recommend this diet!

This is not the first time Martin Strel has broken a world record. In 2000, he swam the length of the Danube River in Europe (1,866 miles). He went on to break that record in 2002 when he swam 2,360 miles down the Mississippi River. As if that wasn't enough! Another two years later, Strel decided he would go for another dip, and swam 2,487 miles along the Yangtze River in China.

Some people may consider the Slovenian crazy, but me? I consider him a warrior. He promises he is not done getting wet, but asserts he will not swim in the notorious Nile River, as he called it "not challenging enough, it is just a small creek." Perhaps if the Nile surged red blood, it would be more his style.

While not all of us may be willing to risk being chewed up alive just to go for a swim, maybe we learn from Strel to set our goals a little higher. When we set reasonable expectations, we are content with achieving mediocrity. You don't have to be a professional athlete to know that mediocrity is nothing more than ordinary. That's like saying winning isn't everything! Set your goals high, and you're sure to get to high places!

The Players' Club creates opportunities for professional athletes which help to make seemingly impossible goals realities. With the guaranteed cash flow through our strategic partner, and therefore ongoing wealth, we open the door for our athletes to the real "big leagues." Don't doubt yourself -- you can do it!

Always remember: Life is a journey; enjoy the ride!

At the time of publication, Dykstra had no positions in stocks mentioned.

Nicknamed "Nails" for his tough style of play during his Major League Baseball career, Lenny Dykstra was an integral member of the powerful Mets of the mid-1980s, including the world champion 1986 squad, and the Phillies in the early 1990s.

Today, Dykstra manages his own stock portfolio and serves as president of several of his privately held companies, including car washes; a partnership with Castrol in "Team Dykstra" Quick Lube Centers; a state-of-the-art ConocoPhillips fueling facility; a real estate development company; and a new venture to develop several "I Sold It on eBay" stores throughout high-demographic areas of Southern California.