Select Water: Great Execution, But I Am Not Diving In Yet

Bjorn Zonneveld, CFA 1.44K Followers Follow Summary Select Water (WTTR) delivered a strong Q2, with revenue up 8.7% and EBITDA of $93M, beating prior guidance. WTTR’s Water Infrastructure segment led growth, aided by a major seven-year Northern Delaware Basin contract and new mineral extraction opportunities. Valuation models (DCF, APV, multiples) yield a blended price target of $17.28, about 14.6% below current levels, reflecting higher margins but increased CAPEX. Key watch items include pipeline construction, mineral extraction progress (iodine, lithium), and evolving risk factors such as regulatory and CAPEX escalation. asbe/iStock via Getty Images In March I published my first article on Select Water ( WTTR ) and concluded that although the company was making the right strategic moves (more focus on the higher margin water infrastructure segment), the valuation was This article was written by Bjorn Zonneveld, CFA 1.44K Followers Follow I focus on stocks with a strong competitive advantage and a strong management team. I have 2 baskets in my own portfolio, small cap stocks and dividend growers. The dividend growers offer me stability, while the small cap stocks are bets on specific themes in the economy with assymetric payoffs. Even though the small caps could become worthless, 2 or 3 (out of the 10 positions) could yield enough returns to make back the losses and then some. While not recommended for everyone, it works for me due to a long investing timeframe. I write about both of these stocks, but mostly on companies that I personally own, have owned in the past or want to potentially own in the future. Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.