H2O Innovation Ord Shs HEOFF

Water Stocks ComparedClean Water  and the treatment and disposal of waste water is going to be a very stong sector for the next 5-10 years.

Everywhere you look, there is a water crisis and that includes N America as well.

For these reason , water treatment stocks trade at very high multiples, due to their future growth prospects and also because so few are publicly listed.

For example, PUR ( $3, market cap of $120 million ) had revenues of $15 million in 2007 and is trading at 45 times net earnings. Its market cap to sales ratio is 8.

BQE ( $3.40 / market cap of $225 million ) had sales of less than $5 million in 2007 , losing over $4 million in the process. Its market cap to sales ratio is 45.

HEO ( $0.90/ market cap of $33 million ) has annual sales of $ 8 million. Its market cap to sales ratio is 4.

Set ( $0.20  ) had sales of $7.5 million and earned 1 cent/share in 2007 has a market cap of $8 million and trades at 1 times annual sales.

All of these have their strengths and all have excellent growth profiles, with HEO and SET likley to double their sales over the next 4 quarters.

My water stocks are HEO and SET, because they are very cheap compared with BQE and PUR and offer an excellent chance for a double or more, and I think SET is a sitting duck for a takeover, as its acquisition would double the annual sales of any of the other 4.