Invesco Water Resources ETF (PHO)

Jun 3, 2022Trade Ideas

Parts of the U.S. are struggling with the worst drought in 1,200 years.

In fact, according to CBS News, “Nearly all of California is experiencing severe, extreme or exceptional drought. Very little rain fell in January, February and March, when the state typically receives half its annual precipitation. As a result, the state is facing its driest ever start to the year, with one recent study calling the current drought the worst in 1,200 years.”

Also, according to the U.S. Drought Monitor, about 54% of the lower 48 states were in a drought. The consequences of the megadrought are increasingly visible in Nevada, where the water level last month in Lake Mead, America’s largest human-made reservoir, dropped so low that it revealed both a five-decade-old intake valve for Nevada water customers.”

That being said, it’s no surprise to see water stocks, and related ETFs push higher. That includes the Invesco Water Resources ETF (PHO). With an expense ratio of 0.60%, some of the ETFs top holdings include American Water Works (AWK), Roper Technologies (ROP), Danaher Corp. (DHR), Xylem Inc. (XYL), and Waters Corp. (WAT) to name a few.

After testing a low of $46.08, shares of PHO are now up to $50.50. From here, with the water situation growing worse, the ETF could test $53, near-term.

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