Water stocks: Time for cyclicals to shine?

The water sector's rally has been led by defensives, but investors should now consider infrastructure and cyclical names, explains Spike Hughes from Cohesion Investments.

2014 has been supportive for global stock market performance, and another strong year for investing in water stocks. However, there has been a surprising dynamic. Defensive rally Predictably, water sector stocks with higher dividends, margins and earnings predictability have been the winners. But generally these have been stocks that were already more highly valued heading into 2014, and have slower predicted earnings growth. What has worked for most of this year is what we would characterise as defensive stocks. That said, ‘defence' is today expensive, with limited upside. Logi...