I've been beating the drum on water as an investment idea for a while now, but I haven't actually bought any company that's a pure play on the space. Why? Well, valuations have gotten a little too healthy, whether you're talking about equipment ideas like Pentair (NYSE:PNR), Franklin Electric (NASDAQ:FELE), and Watts Water (NYSE:WTS), or utility ideas like Suez (NYSE:SZE) and Aqua America (NYSE:WTR).

That last one, though, continues to draw my interest. After rising more than it probably deserved, it's now sliding further (and faster) than it probably should, given its underlying numbers.

Granted, the first-quarter results didn't look so great on the surface. Revenue up just 3%, operating income down 5%, and net income down 12% as reported . who needs that? While I'm not going to play the role of the Wizard of Oz ("Pay no attention to the man behind the curtain"), I just don't think quarter-by-quarter results are too interesting in this kind of stock.

First of all, Aqua America's base rates probably won't increase significantly until the second half of the year. Secondly, Aqua America's in the long-term business of buying assets (often undermaintained assets), fixing them up, and then reaping incremental cash flow over a period of years. If you really want quarter-by-quarter excitement, kindly consider the likes of OmniVisionTechnologies (NASDAQ:OVTI) or TridentMicrosystems (NASDAQ:TRID).

Speaking of Aqua America's acquisitions, I've gotten a few emails asking me, "What happens if it stops doing deals?" To a point, I agree that the company can't or won't grow without deals -- their absence would slow reported revenue and income growth. But if that were to happen, it would also mean that the company's capital expenditures would drop, since it wouldn't need to invest cash in fixing up those acquired properties.

So, at the risk of putting words in the company's mouth, a prolonged slowdown in acquisitions would likely let the company pay down debt and/or return more cash to shareholders through dividends, buybacks, or both. Not exactly a terrible trade-off.

When it comes to the stock, I'm an incorrigible cheapskate. I don't own shares today, and I want a yet-cheaper price before I plunk my own money down. Long term, I believe in water -- I just don't want to pay for it.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).