Consolidated Water Co. Ltd. (the “Company”, or “CWCO”) designs, builds, operates, and in some cases finances seawater reverse osmosis (SWRO) desalination plants and water distribution systems in several Caribbean countries, where the supply of drinking water is scarce and the use of SWRO is economically feasible. The Company was established in 1973 as a private water utility in Grand Cayman, the largest island in the Cayman Islands group, and obtained its first public utility license in the Cayman Islands in 1979. The Company is listed on the Nasdaq Global Select stock market under the symbol “CWCO”.
Consolidated Water is a small cap company, with a current market cap just north of $130 Million, trading at a P/E of 21.43. The company has $9.15 of book value per share, and $2.76 of cash per share against a current price of $8.90 and pays dividend yielding 3.33% at the current price.
I consider CWCO a buy and hold for several reasons.
- The company has large cash reserves and low debt. CWCO currently has in excess of five times the cash on hand available than debt obligations. Aside from their ability to quickly meet any debt commitments, the available cash can be used to finance future expansions.
- The management team has an ownership stake over 10%.
- A decade long rise in dividends, from 5.25 cents per quarter in 2003 to 7.5 cents per quarter in 2012.
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