"Wealth building is about buying quality on the cheap; and you're not going to find the best water industry stocks at better prices than they sell for now," says utility sector specialist Roger Conrad.

In his The Utility Forecaster, the advisor reviews the three water stocks that earn a place among the core holdings in his growth portfolio: Aqua America (NYSE: WTR), Consolidated Water (NASDAQ: CWCO) and Southwest Water (NASDAQ: SWWC).

"All three of these water stocks posted disappointing first quarter earnings for very different reasons. However, all remain tapped into long-run, wealth-building opportunities.

"Aqua's first quarter results were by no means a disaster. But they lagged both last year's total and Wall Street estimates.

"Management blamed the slowing economy's impact on housing starts in what had been fast-growing systems, rising bad debt, lower commercial sales, delays in fully digesting acquisitions in the South and longer-than-expected timetables needed to win rate increases.

"But Aqua has reached an important milestone this year: the scale to make meaningful acquisitions of larger systems, which will eventually take growth to new heights. And all of the above challenges are temporary in nature.

"The company has $65 million in pending rate increases, including a $42 million effort in its home state of Pennsylvania, slated for completion in August. An extensive system upgrade is largely finished, meaning costs will decline.

"In short, the long-term picture is still intact at Aqua. It may still be some months before earnings turn up enough to bring back the buyers, but the risks aren't high.

"Southwest Water has also grown rapidly over the past two decades by acquiring small water utilities. And it's tapped into the water management business as well, inking contracts to run systems of municipalities that politically wanted to keep control of their water.

"Rapid five-year compound annual growth of assets (14%), revenue (12%) and operating income (14%) came at the price of diminished profitability.

"Now under new CEO Mark Swatek, the company is pruning underperforming assets, lowering the cost structure and boosting financial strength to return to high-growth mode. It's also attained scale to make more targeted acquisitions, such as the $23.3 million purchase of an Alabama wastewater system earlier this year.

"First quarter earnings were a step in the right direction, as both the utility and services business posted solid results. A loss because of restructuring costs shows there's still a ways to go. But again, risks are also low.

"Shares of sea-to-freshwater producer Consolidated Water have been all over the map during the past 12 months. Investors hyper-bullish on its technology and unique position serving parched Caribbean islands shifted to hyper-bearish on the threat of impairment of its investment in the British Virgin Islands (BVI).

"Uncertainty surrounding the BVI dispute continues to drag on the shares. Fortunately, it's increasingly insignificant to Consolidated's assets and earnings, as the company brings new projects online.

"Weak first quarter earnings-mainly because of a loss taken for BVI-have knocked the premium out of the stock, but most of the risk has been eliminated as well."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.