These stocks could land big profits from filling Big Tech's critical water needs

MW These stocks could land big profits from filling Big Tech's critical water needs

By Charlie Garcia

Charlie Garcia responds to readers concerned about the scarcity of ultrapure water and the Japanese stocks that provide it

Editor's note: Columnist Charlie Garcia shares select emails and online comments from his virtual mailbag each week.

Dear Charlie,

Your piece on semiconductor water purity may have overlooked something important. Water conditioning to those specs eliminates filtration and chemical treatments as final tuning steps. The real bottleneck will be expensive exchange media - reverse-osmosis membranes and ion-exchange resins. Those pathways require absurd amounts of media per gallon of water.

So DuPont $(DD)$ shouldn't be neglected just because water represents a lower percentage of their current business. Sales numbers should surge, and the percentage of DuPont's business after breakdown will be higher anyway, as water stays with DuPont.

John

Dear John,

This is exactly the kind of comment that makes me smarter. You're right. I focused on the Japanese pure-play companies because they're the easiest way to bet on the thesis. But the bottleneck you're describing - the exchange media itself - is upstream of everything else.

Reverse-osmosis membranes and ion-exchange resins are consumables. The fabs keep buying them forever. DuPont's water business may be a small percentage today, but percentages change when demand explodes. And you're correct that the sales surge will reweight the portfolio automatically.

I underweighted Dupont because the stock gives you exposure to a dozen other things. But for investors who already own it or want a diversified industrial with a hidden water kicker, your point stands.

Charlie

P.S. I love it when readers do my job for me.

Dear Charlie,

I read your piece on ultrapure water companies and wanted to buy Organo (JP:6368). But when I pulled it up at my broker, the OTC ticker (ORGJF) showed a $30 jump in a single day. That can't be right. Am I looking at bad data?

And if so, how do I buy this thing?

Ray

Dear Ray,

That $30 jump is likely stale OTC data updating in chunks. ORGJF trades maybe a few hundred shares a day, over the counter, on a good day. You're watching a ticker that moves like a sundial.

Here's what I do: Use Interactive Brokers $(IBKR)$, which lets you buy Organo directly on the Tokyo Stock Exchange in yen (USDJPY), where the actual liquidity lives. Real-time pricing, tighter spreads, no OTC markup.

Yes, you'll deal with currency conversion and Tokyo trading hours, but you're buying the real thing instead of a derivative pink-sheet quote that updates whenever it feels like it.

And here's the kicker: The yen is trading around 156 to the dollar DXY right now, so your dollars buy more shares today than they would have a few years ago. If the Bank of Japan keeps raising rates while the Fed cuts, that yen strengthens and you get a currency tailwind on top of your stock gains. Two ways to win.

Your instinct to wait for a dip is solid. The stock's had a monster run. And you're connecting the right dots: power, cooling, water. This unholy trinity makes AI work. Everyone's been chasing Nvidia (NVDA). The smart money's in the plumbing.

Charlie

P.S. Currency risk cuts both ways. But right now, the yen looks on sale.

The best investment advice I ever got: Follow the compliance budget.

Dear Charlie,

Something in your column made me do a double take. You wrote that conservation and water recycling end up requiring more equipment, not less. You called it "the rare public-policy miracle where everyone gets to feel morally superior while buying more expensive equipment."

I've been in industrial water treatment for 22 years, mostly municipal but some pharma work. And I have to say that's the most honest description of what's happening I've seen in any financial publication. The enviros get their win, the regulators get their metrics, and guys like me keep adding skids and sensors to systems that were already complicated.

But here's my question: Are you rooting for tighter environmental regulations because they're good for these stocks? Have you gone soft on us?

Tom

Dear Tom,

I'm not rooting for anything, but I've learned to read the scoreboard.

Here's the math: Regulators tell fabs they need to recycle more water and hit tighter purity standards. Fabs comply, because the alternative is no permits. Compliance means adding reverse-osmosis stages, more ion-exchange capacity, additional sensors, cloud-monitoring platforms, and consultants to integrate the whole mess.

Every layer of environmental virtue requires another layer of capital equipment. The companies selling that equipment don't care whether the regulations come from tree huggers or national-security hawks. They just count the purchase orders.

It's the rare policy outcome where the greens, the industrialists and the shareholders all get what they want: The greens get cleaner water, the fabs get their permits, and Kurita Water Industries (JP:6370) $(KTWIY)$, Xylem $(XYL)$ and DuPont get recurring revenue.

I'm not soft. I'm just paying attention to who actually makes money when politicians hold press conferences.

Charlie

P.S. The best investment advice I ever got: Follow the compliance budget.

My broker looked at me like I had three heads when I asked about buying Organo.

Dear Charlie,

I read your piece on ultrapure water and I'm intrigued, but I have to be honest with you. Three of your top picks are Japanese companies. I'm 58 years old, I've got maybe 10 good investing years left before I start drawing down, and the last time I bought a Japanese stock was Sony (JP:6758)( SONY) in the late 1980s. We both know how that worked out for a generation of American investors who thought Tokyo was the future.

I get that these companies have real businesses tied to real semiconductor growth. But between the currency risk, the time-zone issues and the fact that I can't read a single word of their financial statements, I'm hesitant. My broker looked at me like I had three heads when I asked about buying Organo.

Is the Japan exposure really necessary here, or can I get similar upside with Ecolab $(ECL)$ and Xylem, and sleep better at night? I'd rather leave a little money on the table than wake up at 2 a.m. checking the Nikkei JP:NIK.

Steve

Dear Steve,

You're not wrong to be cautious. Japan broke a lot of hearts in the '90s, and "this time is different" are the four most expensive words in investing.

But here's what is different: You're not buying Japan Inc. You're not betting on Japanese banks or real estate or some ministry's five-year plan. You're buying companies that happen to be domiciled in Japan, but whose revenue follows TSMC $(TSM)$, Samsung (KR:005930) and Intel $(INTC)$ wherever they build fabs. Organo's business is more tied to what happens in Arizona and TSMC's new Japanese fabs than to the Tokyo Stock Exchange.

That said, your instincts aren't crazy. Ecolab and Xylem are perfectly respectable ways to play this theme without learning the yen-dollar cross. You'll get less torque. Kurita and Organo are purer plays on fab buildouts; Ecolab still makes most of its money keeping restaurant kitchens sanitary, while Xylem sells a lot of municipal pumps.

If Japan makes you nervous, split the difference. Put your core position in Ecolab or Xylem for the sleep-at-night factor. Keep a smaller allocation to one Japanese name for the upside. Organo is the one most tied to TSMC, which is as close to a sure thing as semiconductors offer.

Charlie

P.S. Sony's stock did fine if you held it long enough. The problem was that everyone sold in 2003.

Charlie Garcia is founder and a managing partner of R360, a peer-to-peer organization for individuals and families with a net worth of $100 million or more. He owns shares of Organo Corp. and has no positions in the other companies mentioned.

Agree? Disagree? Share your comments with Charlie Garcia at charlie@R360Global.com. Your letter may be published anonymously in the weekly "Dear Charlie" reader mailbag.

By emailing your comments to Charlie Garcia, you agree to have them published on MarketWatch anonymously, or with your first name if you give permission. You understand and agree that Dow Jones & Co., the publisher of MarketWatch, may use your story, or versions of it, in all media and platforms, including via third parties.

More from Charlie Garcia:

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-Charlie Garcia

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December 12, 2025 17:29 ET (22:29 GMT)

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