US Water and Power Squeeze
Allen Lee@allen
−0.4%
since Oct 6
The idea
I think the US is heading into a long structural squeeze on both water and power, as aging infrastructure, population shifts, and AI driven demand strain both systems at once. Rather than pick a single winner, I own the toll collectors across the whole chain: water utilities and treatment, grid equipment makers, the pipes and meters rebuilding the system, and power producers adding capacity. I keep some cash on the side, spread bets across many names instead of concentrating, and plan to hold for years, revisiting only if the underlying shortage thesis itself breaks down.
What it owns
- Companies that own, clean and sell water earn higher returns as scarcity increases. · XylemIt sells the pumps, meters, and analytics that utilities install during modernization, earning fees regardless of which utility leads, like a toll-collector on water infrastructure spending., American Water WorksAs the largest US water utility, it earns regulated returns on spending to replace aging pipes, which works as long as regulators approve infrastructure investment and corresponding rate increases., EcolabIt helps factories, data centers, and chip plants use less water, so if scarcity rises and water becomes expensive, customers more readily justify the cost of conservation services., Essential UtilitiesIt consolidates small municipal water systems, and if towns keep selling strained systems to companies that can fund repairs, this compounds across the portfolio., VeraltoIt makes testing and water treatment equipment, and scarcer water drives more recycling and reuse, each cycle requiring testing and quality verification.28%
- Transformers and switchgear are the bottleneck in adding any new power, regardless of the source. · EatonIt sells the electrical equipment that data centers, semiconductor plants, and the grid all depend on, earning returns as long as utility and data center order books expand., Quanta ServicesIt physically builds and upgrades transmission lines and substations, with a backlog that directly reflects whether grid expansion is actually happening., GE VernovaIt sells gas turbines and grid equipment, the two essentials needed when new power capacity and transmission must be added simultaneously., HubbellIt makes the connectors, enclosures, and components that every grid upgrade requires, earning returns on volume without depending on which utility wins., Powell IndustriesIt specializes in switchgear that routes and protects electricity in data centers and industrial sites, with higher volatility tied to data center and industrial electrical demand.26%
- America's water pipes are decades past their lifespan, and these companies supply the equipment for rebuilding. · PentairIt sells pumps and filtration systems, and its acquisition of Taco Group expands what it can sell into water and building systems as water movement and cleaning demand rises., Mueller Water ProductsIt makes the valves and hydrants that get replaced during old pipe upgrades, directly benefiting if US pipe replacement spending keeps accelerating., Watts Water TechnologiesIt makes the valves and flow controls inside buildings and water systems, benefiting from the same infrastructure repair and replacement wave., Badger MeterIt sells smart meters that help utilities detect leaks and bill accurately, becoming essential when water scarcity makes precise measurement non-negotiable., Advanced Drainage SystemsIt makes pipes and systems that capture and manage stormwater, becoming more critical as dry states grow and require infrastructure to catch every available drop.20%
- Generators with room to add capacity profit directly when electricity demand outpaces supply. · Constellation EnergyIt owns the largest US nuclear fleet generating round-the-clock power that data centers already pay premiums to secure under long-term contracts., NextEra EnergyIt adds new power capacity, mostly renewables, faster than any other US company, so it profits from every megawatt built if electricity scarcity pushes customers toward long-term reliable supply contracts., VistraIt owns gas and nuclear plants in regions where demand is surging, particularly Texas, so it profits without building anything new if power markets stay tight.17%
- Other · VRT, TLN5%
- Cash4%