Sometimes, the investing universe seems like it's upside down. Many of the largest consumer-facing companies make products that fall squarely in the nice-to-have category rather than being necessities. By contrast, many companies involved in the vital business of providing essentials like food, shelter, and clothing are much smaller despite their importance. That can cause investors to neglect the companies that meet these basic human needs, and that opens up an opportunity for the Voyager Portfolio to take a closer look.
The third stock I'm exploring focuses its business squarely on another essential need: water. Badger Meter (BMI +0.25%) has a funny name that stems from its Wisconsin roots, but the Milwaukee-based company has well over a century of experience helping to bring cutting-edge technology to the water industry. And while few would identify Badger Meter as a growth stock, longtime shareholders would beg to differ, pointing to 100-bagger performance over the past 30 years. In this first article of a three-part series, you'll learn more about the smart water trend and the role that Badger is playing to make it a reality.
Image source: Getty Images.
Water, water everywhere
Water utilities are largely responsible for building and maintaining the vast, complex infrastructure that brings drinking water from sources like lakes, reservoirs, and underground aquifers to your faucet. In order to get paid for the efforts, water providers need to be able to measure water flows accurately and minimize lost water from leaks and imprecise measurement.
In the 20th century, mechanical water meters were a key innovation that allowed water providers to measure flows with great accuracy. Indeed, Badger Meter's origin story stems from efforts from its two founding entrepreneurs in 1905 to make a water meter that would work in the brutal winter conditions in the Great Lakes region. But a century later, the pace of technology advancement has made it possible to introduce advanced metering infrastructure (AMI) that takes full advantage of the latest hardware, software, and systems. Put together, this has created an entire "smart water" trend that allows for real-time measurement along with water quality monitoring capabilities, and it has fed into broader movements toward adoption of smart home technology.
NYSE: BMI
Key Data Points
Badger Meter's role in smart water innovation
Research and development are at the core of Badger Meter's business philosophy. The company's ultrasonic metering devices measure flow, pressure, and temperature through proprietary technology that's vertically integrated within Badger's business. Sensor equipment powered by advanced edge computing and the Internet of Things helps clients monitor over 60 characteristics of water quality and inform them of adverse events.
In addition to the hardware needed to gather data at the source, Badger has also taken it upon itself to develop cloud-based software that offers a holistic view of water networks and systems. By informing users of anomalous events, users of Badger's software can access decision dashboards and even take advantage of process automation capabilities to have systems autonomously react to certain situations. Moreover, having installed millions of cellular endpoints through multiple wireless network carriers, Badger has gotten out to a 10-year head start in creating an Internet of Things network that takes advantage of the latest technological capabilities in data communications.
Despite the company's name, don't make the mistake of thinking that Badger Meter is a tiny local business. Milwaukee is indeed a hub for innovation in software, cellular communication, and ultrasonic technology. But you'll find key operations elsewhere, such as its software development unit in the Bay Area suburb of Los Gatos, ultrasonics research in Sweden, water quality research centers in Austria, and a host of manufacturing facilities across North America and Europe.
Turning water into money
Badger Meter clearly takes on a vital role in the water industry, but that doesn't explain how it has managed to grow over time to become the industry leader it is today. You'll learn more about Badger's financial prowess in the next article of this three-part series for the Voyager Portfolio.
