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Watts Water (WTS) Hits 52-Week High: What's Driving It?

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Shares of Watts Water Technologies, Inc. (WTS - Free Report) scaled a fresh 52-week high of $75.95 on Dec 14, eventually closing lower at $75.60. The company’s recent share-price performance has been driven by acquisition spree, growing investments and focus on strategic initiatives.

Notably, the stock has gained 19.2% in six months’ time, higher than the S&P 500 index’s gain of 9.6%. Watts Water has also outperformed the industry’s gain of 17.7% during the same time frame with respect to price performance.

The company has a market cap of $2.6 billion. Over the last three months, its average volume of shares traded has been roughly 131.2K.



Favorable Rank & Style Score

The company currently carries a Zacks Rank #3 (Hold). Further, Watts Water has an impressive VGM Score of B. In this, V stands for Value, G for Growth and M for Momentum, and the score is a weighted combination of these three scores. Such a score eliminates the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.

Our research shows that stocks with Style Scores of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3, offer the best investment opportunities.

What Led to the 52-Week High?

Notably, Watts Water’s third-quarter 2017 earnings improved 13% year over year, driven by its continued execution of key strategic initiatives, including many transformations and restructuring actions undertaken by the company. It also benefited from PVI acquisition and higher volumes.

Watts Water remains focused on its acquisition strategy. The company has completed 21 acquisitions in the last 10 years. In November 2016, the company acquired 100% PVI Riverside Holdings, Inc. — a leading manufacturer of commercial stainless steel water heating equipment — focused on the high capacity market in North America. In December 2016, Watts Water completed the acquisition of AERCO, a leading manufacturer of a wide range of high-efficiency commercial boilers and water heaters.

Further, Watts Water anticipates growth investments to be higher in the fourth quarter compared with the third quarter, as it has increased investments at some of its manufacturing sites, in IT tools, which will boost productivity. The company estimates total capital expenditure of roughly $30 million for the current year.

Watts Water also strives to invest in product innovation. The company continuously looks for strategic opportunities to invest in new products and markets or divest existing product lines. Further, it remains focused on maintaining stringent quality control and testing procedures at each manufacturing facility.

The company recently introduced SmartSense — a gas connector kit — which automatically shuts off gas flow at a prescribed temperature range and provides protection against gas leaks, in case a gas line is compromised. Watts Water has also successfully rolled out its European stainless steel-drains offering in the American markets.

Stocks to Consider

Some better-ranked stocks in the same space include Allied Motion Technologies Inc. , Axcelis Technologies, Inc. (ACLS - Free Report) and Analog Devices, Inc. (ADI - Free Report) . All three stocks sport a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Allied Motion Technologies has a long-term earnings growth rate of 16%. Its shares have appreciated 56.8% year to date.

Axcelis Technologies has a long-term earnings growth rate of 20%. Its shares have rallied a whopping 99% during the same time frame.

Analog Devices has a long-term earnings growth rate of 10.4%. The stock has been up 17.3% in the year so far.

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