Thirsty for Gains? Consider These Clean-Water Companies

One of the issues facing our country today is assuring we have enough clean drinking water. For those who want to invest in this industry, the choices include the PowerShares Water Resources ETF (PHO)  and its five largest components: American Water (AWK) , Danaher (DHR) , Ecolab (ECL) , Pentair (PNR) and Roper Technologies (ROP) .

The water resources exchange-traded fund includes water utilities, infrastructure companies, and equipment and materials companies. The ETF has a gain of 11% year to date and is in bull market territory 32.5% above its Jan. 20 low. Its weekly chart is neutral and beware that there's a technical downtrend for the ETF going back to its all-time high set in April 2014. Given this profile, investors might consider buying one or more of the five largest components.

The ETF closed Wednesday at $24.05 and the levels at which to buy on weakness are $22.64 and $19.30, which are key levels until the end of 2016. Investors looking to reduce holdings should do so on strength to $26.71 and $28.24, which are key levels until the end of November and the end of 2016, respectively.

If you prefer buying individual companies, the five biggest components of the ETF reported their quarterly earnings between Oct. 20 and Nov. 2. Each beat analysts' earnings-per-share estimates.

The weekly charts show a red line through the price bars, which are the key weekly moving averages (five-week modified moving average). The green line is the 200-week simple moving average considered the "reversion to the mean."

The study in red along the bottom of the chart is weekly momentum (a 12x3x3 weekly slow stochastic), which scales between 00.00 and 100.00, where readings above 80.00 indicates overbought and readings below 20.00 indicates oversold.

A negative weekly chart shows the stock below its key weekly moving average with weekly momentum declining below 80.00 in a trend towards 20.00. A positive weekly chart shows the stock above its key weekly moving average with weekly momentum rising above 20.00 in a trend towards 80.00.

Here's today's scorecard for the water resources ETF and the five largest components.

 

Here's the weekly chart for American Water Works.

 

Courtesy of MetaStock Xenith

American Water Works trades around $72, up 20.9% year to date and in bull market territory 22.7% above its Jan. 20 low of $58.90. The stock is also in correction territory 15.2% below its July 5 high of $85.24.

The weekly chart is negative but oversold with the stock below its key weekly moving average of $72.76. The stock is well above its 200-week simple moving average of $53.42. The weekly momentum reading is projected to rise to 17.15 this week up from 15.10 on Nov. 4, becoming less oversold.

Investors looking to buy American Water should consider doing so on weakness to $65.08, which is a key level on technical charts until the end of 2016. Investors looking to reduce holdings should do so by selling strength to $75.00 and $78.36, which are key levels on technical charts until the end of 2016.

Here's the weekly chart for Danaher.

 

Courtesy of MetaStock Xenith

Danaher shares trade around $80, up 14% year to date and in bull market territory 30.3% above its Jan. 26, 2016 of $61.58.

The weekly chart is positive with the stock above its key weekly moving average of $78.56 and well above the 200-week simple moving average of $62.20. The weekly momentum reading is projected to rise to 37.52 up from 36.49 on Nov. 4.

Investors looking to buy Danaher should consider doing so on weakness to $74.98, which is the 200-day simple moving average. Investors looking to reduce holdings should do so by selling strength to $83.39 and $85.24, which are key levels on technical charts until the end of 2016.

Here's the weekly chart for the Ecolab.

 

Courtesy of MetaStock Xenith

Ecolab trades at $115, up just 0.3% year to date and up 16.4% since setting its Feb. 24 low of $98.62.

The weekly chart is negative but oversold with the stock below its key weekly moving average of $116.17 but above its 200-week simple moving average of $106.71. The weekly momentum reading is projected to slip to 16.39 this week down from 18.78 on Nov. 4, becoming more oversold below the threshold of 20.00.

Investors looking to buy Ecolab should consider doing so on weakness to $103.77, which a key level on technical charts until the end of 2016. There is a key level of $113.98, which should be a magnet for the remainder of 2016. Investors looking to reduce holdings should do so by selling strength to $131.63, which is a key level on technical charts until the end of November.

Here's the weekly chart for Pentair.

 

Courtesy of MetaStock Xenith

Pentair trades at $57, up 15.7% year to date and in bull market territory 37.8% above its Feb. 11 low of $41.57. The stock is also in correction territory 14.5% below its Aug. 15 high of $66.99.

The weekly chart is negative but oversold with the stock below its key weekly moving average of $58.36 and below its 200-week simple moving average of $62.40. The weekly momentum reading is projected to decline to 17.20 down from 19.28 on Nov. 4, becoming more oversold below the threshold of 20.00.

Investors looking to buy Pentair should consider doing so on weakness to $54.43, which is a key level on technical charts until the end of 2016. The $58.09 level should be a magnet for the remainder of 2016. Investors looking to reduce holdings should do so by selling strength to $70.79, which is a key level on technical charts until the end of November.

Here's the weekly chart for the Roper Technologies.

 

Courtesy of MetaStock Xenith

Roper Tech trades at $177, down 6.8% year to date and is up 13.6% since its Feb. 2 low of $155.79.

The weekly chart is neutral with the stock above its key weekly moving average of $174.23 and above its 200-week simple moving average of $153.54. The weekly momentum reading is projected to decline to 37.46 this week down from 43.86 on Nov. 4.

Investors looking to buy Roper should consider doing so on weakness to $169.72, which is a key level on technical charts until the end of 2016. Investors looking to reduce holdings should do so by selling strength to $182.63, which is a key level on technical charts until the end of November.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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