Savings Experiment: Snow Removal
The Money Man Behind Rick Santorum: Who Is Foster S. Friess?"One essential commodity that is often overlooked by investors is water," says Gregory Dorsey, contributing editor to Stephen Leeb's Income Performance Letter.
He explains, "It's absolutely vital and is in growing demand for many reasons. And we've found an excellent way for income investors to ride this trend -- Paris-based Veolia Environnement (NYSE: VE). Here is his review.
"Veolia is not your typical utility, but it's still a utility that every income investor should consider. Veolia is the world leader in the management of water and wastewater services for local governments, industrial and service sector clients.
"It's also a world leader in the design, construction and operation of facilities for water and wastewater systems. With a focus on managing the complete water cycle from extraction to treatment to waste, Veolia stands ahead of its competitors.
"But although water is the chief attraction for us, Veolia generates steady revenue and income from other businesses as well.
"Its Veolia Environmental Services covers the entire solid waste cycle, including urban cleaning services, soil and site remediation, collection, sorting, transfer, treatment and recycling/recovery and is the world's largest waste management company.
"The company's Energy services business provides energy, climate conditioning (heating and cooling) and public lighting services to industrial and municipal clients in Europe, North America and China. Pollution emission treatment and carbon capture projects are another promising area for the company.
"Its Veolia Transport business is Europe's largest operator of ground passenger transportation services, providing outsourced management of urban, regional and national public transit systems along with rail freight lines and airport hub services.
"The stock has shed more than a quarter of its value since peaking last December. It was particularly hard hit in March when the company reported its full-year 2007 results. Veolia's revenue rose 14% for the year and its net income rose more than 22%.
"But that later figure was slightly below consensus estimates, prompting analysts to lower the projections for the company going forward. The selling was far in excess of what was warranted by the profit shortfall and it has set up a good buying opportunity for us.
"Veolia is a dominant player on the European continent, but its arms reach across the globe. In fact its exposure to emerging markets, including China, the Middle East and Africa should act as powerful drivers to the company's bottom line for years to come.
"Wall Street is now expecting Veolia to grow its earnings at a better than 13% annual pace during the next five years. We suspect it will expand at an even faster pace.
"We look for the stock's price-to-earnings multiple to climb as a result, which will add to the company's capital appreciation. And while the stock is rising in value, you'll collect a juicy dividend that currently yields 3.6%."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
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