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Shares of Xylem Inc. (XYL - Free Report) reached a new 52-week high of $35.29 during its trading session on Jan 10. This marks a nominal increase from the previous high of $34.93 that the stock hit on Nov 20, 2013.

Xylem closed the trading day on Jan 10 at $34.91, reflecting a solid return of 29.2% in the past one year. The trading volume for the session was 956K shares. The water solutions provider company, with a Zacks Rank #3 (Hold), has potential for further accretion. This is reflected in both its expected earnings growth rate (8.1% over the next five years) and earnings estimate revision for 2014.

Growth Drivers

We are bullish about Xylem’s long-term growth prospects as its contract pipeline is strong, which improves the possibility of better revenues in the quarters ahead. In the third quarter 2013, the company received total orders worth $955 million, which reflected an increase of 8% year over year on a constant currency basis.

Major order wins included $6.5 million Singapore deal and the largest ozone contract in China worth $1.9 million. In Dec 2013, Xylem won a $2.7 million contract to provide equipment and technology for a storm water drainage system along Route 35 on the New Jersey coastline.

Also, Xylem has to its credit contract wins in India, Colombia, United Arab Emirates, Sweden and Beijing.

Additionally, Xylem is focusing on enhancing shareholders’ value through dividend payments and share buybacks. In the first nine months of 2013, the company returned $107.0 million to shareholders via dividends and share repurchases, compared with $58.0 million in the first nine months of 2012.  

Also, Xylem has an average surprise of 5.1% in the trailing four quarters. For 2013, the company has an Earnings ESP of +0.61%.

Other Stocks to Consider

Xylem currently has a market capitalization of $6.4 billion. Other stocks to watch out for in the industry are Altra Industrial Motion Corp. (AIMC - Free Report) , Graco Inc. (GGG - Free Report) and The Middleby Corporation (MIDD - Free Report) . All these carry a Zacks Rank #2 (Buy).

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