We are at the beginning stages of a global fresh water crisis; with many experts believing it will go into full swing in the 2030s.
Since, I have no way of solving the crisis, I figured I would profit from it. I found a relatively small company trading at $3.11. They make water filtration systems for hospitals and have recurring revenue model selling replacement parts. They have no debt and made a million in revenue last year however, larger firms have short interest in the company. Why?
I get that they have small cap with a low trading volume which makes them a prime target for shorting. However, they are industry that is growing, with no debt and their revenue has grown about 30% each year. Plus with the government potentially banning forever chemicals in the water, they could have a chance to explode.
Did I stumble into something or am I crazy for wanting to buy $3k worth of it?
Posted by coacht246
2 Comments
No debt and 30% growth sound nice, but on a tiny name I’d look harder at gross margin, cash burn and dilution risk. In illiquid small caps short interest isn’t always some deep signal. Sometimes it’s just ‘prove the story turns into cash.’
I wouldn’t say crazy but you’re not understanding the water space. I have quite a lot of experience with it on the municipal, environmental, and industrial (pharma mfg) end.
Hospitals intake fresh water meeting drinking water standards from municipal supply and then treat is for specific uses (infection control treatment, dialysis water treatment, lab deionization, etc.). Due to this, their treatment system needs are not linked to the “global fresh water crisis”.
If you want things linked to an impending fresh water crisis you’d look at companies that provide desalination, municipal water treatment solutions, or maybe even wastewater reuse technologies. Not saying those are the right place to invest either, just that those are directly impacted by a water crisis if it occurs.