Kiplinger\'s Personal Finance - 04.2020

2424 KIPLINGER’S PERSONAL FINANCEKIPLINGER’S PERSONAL FINANCE^ 04/202004/2020

three segments, primarily

in the U.S. and in emerging

markets. Water Infrastruc-

ture focuses on the trans-

portation, testing and

treatment of water. The

Applied Water segment

makes pumps, valves, heat

exchangers and dispensing

equipment. Measurement &

Control Solutions helps com-

panies use water wisely.

Xylem said in November

that demand from indus-

trial end users, such as oil

and gas companies and

mining firms, had softened,

clouding the stock’s short-

term outlook. But its re-

maining operations are

doing well—in particular

with utilities, which repre-

sent roughly 50% of reve-

nues, according to analyst

Michael Gaugler at invest-

ment firm Janney Mont-

gomery Scott. He recom-

mends the stock for patient

investors.

Over the long haul, Xylem

should benefit as utilities

continue to adopt smart

metering, sophisticated

data analytics and other

cost-saving services and

equipment. Moreover, ac-

cording to ValueLine ana-

lysts, the U.S. is in the early

stages of what will be a sig-

nificant cycle of upgrades

for water infrastructure,

while emerging markets

also continue to modernize.

Investors should note that

Xylem is sensitive to U.S.–

China relations, and that

foreign currency f luctua-

tions can impact profits. For

now, the company’s healthy

balance sheet and free cash

f low are a plus. For inves-

tors with a long-term view,

Xylem may be a cool drink

of water.

some 3,500 agronomists

and experts working with

growers to reduce the

environmental impact of

fertilizers while boosting

crop yields sustainably.

Analysts expect profits

of $2.84 per share in 2020,

giving the shares a P/E of

just 15 times year-ahead

earnings. The stock, trad-

ing near a 52-week low, is

rated “buy” by investment

firm CFRA. The shares

sport a robust dividend

yield of nearly 4%.

KEEPING THE

WATER FLOWING

Just about everything on

the planet needs water.

Fresh water accounts for

just 2.5% of the Earth’s

water, and we’re not get-

ting any more of it, despite

the world’s increasing pop-

ulation. XYLEM (XYL, $82)

provides equipment and

services that address the

full water cycle, from col-

lection to distribution and

use, to the return of water

to the environment.

The company operates in

Boosting crop yields

with more fertilizer is one

way to address increasing

weather woes. NUTRIEN

(NTR, $43), a Canadian firm

whose stock trades on the

New York Stock Exchange,

is the world’s largest fertil-

izer company. Although

the company isn’t small—

its market value is nearly

$25 billion—it’s a somewhat

new entity. Nutrien was

formed in 2018 through

the merger of Potash Corp.

of Saskatchewan and

Agrium Corp.

The company weathered

a challenging year in 2019,

marked by the worst U.S.

planting season in over a de-

cade (thanks to heavy rains

and f looding) and trade

wars that cut U.S. soybean

exports to China.

Although Nutrien pro-

duces crop nutrients, more

than half of annual sales

come from its retail divi-

sion, with more than 1,700

locations that sell seeds,

fertilizer and other mer-

chandise directly to farm-

ers. The firm says it has

the United States, Malaysia

and Vietnam. The firm’s

proprietary, thin-film semi-

conductor technology has

helped keep costs down—a

key consideration in a highly

def lationary industry.

The stock logged a 2%

loss over the past year, a

return that masks some big

ups and downs along the

way. But the company has a

huge backlog of new orders,

and the shares are reason-

ably priced, according to

investment research firm

Morningstar, which calcu-

lates a fair value for the

stock of $62 a share. Wall

Street analysts expect the

company to report profits of

$3.58 a share in 2020, giving

the shares a price-earnings

ratio of just under 14.

COMBATING

CLIMATE CHANGE

No matter what your views

are on climate change,

there’s no arguing that

weather patterns are chang-

ing. Farming, which has

never been easy, bears the

brunt of weather extremes.

INVESTING

PLANET-FRIENDLY STOCK CHOICES

Go for the Green

Invest in the companies below—which collectively harness the power of the sun, wind and waste; conserve

water; and boost food production—to give your portfolio a sustainable edge.

Fund Symbol Price

1-year

return

Market

cap

(billions) P/E* Company info

Darling Ingredients DAR $27 27.6% $4.4 15 Produces sustainable ingredients for food and fuel

First Solar FSLR 50 –2.0 5.2 14 Designs and makes solar power systems

Nutrien NTR 43 –14.2 24.5 15 Makes and sells crop nutrients to boost production

TPI Composites TPIC 21 –31.6 0.75 20 Manufactures blades for the wind power industry

Waste Management WM 122 29.4 51.6 26 Recycles and disposes waste

Xylem XYL 82 15.9 14.7 25 Provides water and wastewater applications

S&P 500 21.7% 18

As of January 31. *Based on estimated earnings for 2020. SOURCES: Yahoo Finance, Morningstar Inc., Refinitiv.