We recently published a list of 10 Best Water Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Tetra Tech, Inc. (NASDAQ:TTEK) stands against other best water stocks to buy according to hedge funds.

The water business in the USA is a diverse sector that includes various activities necessary for the development of urban and rural communities. Public utilities are the backbone of this industry – hundreds of public services offer ordinary, everyday water supply and wastewater treatment services to millions of homes and businesses. Such organizations provide the source, treatment, and distribution of potable water, in addition to wastewater collection and treatment to meet environmental standards. Beyond the realm of public utilities, the water industry includes private companies whose expertise is focused on water infrastructure engineering, consulting, and construction. These companies often collaborate with government agencies to modernize aging water systems and implement sustainable solutions, meaning that a significant portion of the water management market is financed from public budgets. They also provide cutting-edge technologies for water purification, desalination, and leak detection, which play a crucial role in improving the efficiency and reliability of water systems.

Several trends and tailwinds are currently shaping the water business in the USA and the rest of the world. One of the most significant trends is the increasing focus on sustainable water management practices due to growing concerns about water scarcity and climate change. Smart water grids and modern metering infrastructure are some of the inventive interventions being implemented to help make water use more efficient and also cut losses. The emergence of digital technologies such as IoT and AI is disrupting the status quo, providing new ways for water utilities to monitor and manage their operations, allowing for real-time data collection and analysis followed by predictive maintenance – this will not only help make water consumption more sustainable, but may also provide significant opportunities for profitability expansion by cutting some operational costs. Another significant trend is the rising investment in water infrastructure, fueled by government initiatives and public-private partnerships aimed at upgrading aging water systems and expanding access to clean water.

From an investment perspective, the future of the water business in the USA looks bright, with several factors contributing to its potential growth. First, there’s an increasing demand for clean and safe water, which is primarily driven by population growth and urbanization. This issue presents substantial opportunities for water treatment companies and distributors. Moreover, the increasing awareness and focus on the environmental and sustainability aspect of the operations, primarily caused by regulatory requirements, are likely to fuel demand for innovative water management solutions and sustainable practices. Investors are particularly interested in the water solutions sector due to its incredible resiliency during recessionary periods; as many water-related projects are sponsored by public budgets, companies exposed to water operations usually have a low equity beta, meaning that they are likely to outperform the broad market during bearish periods. This feature is particularly attractive during stock market peaks – the US equity market is currently near its all-time highs, all while the actions of the new Trump 2.0 regime are starting to cause cracks in the outlook of businesses and consumers. With many surveys and intelligence agencies reporting a sentiment change towards more pessimistic scenarios, as well as significant cuts in the outlook for capital spending by private entities, water-related businesses may become more favored in the eyes of the “smart money”. In view of this, we will take a look at some of the best water stocks to buy now.

Our Methodology

We used the Insider Monkey proprietary hedge fund holding database and identified the 10 most popular water companies, ranked by the number of hedge funds which own the stock.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

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Tetra Tech, Inc. (NASDAQ:TTEK)

Number of Hedge Fund Holders: 37

Tetra Tech, Inc. (NASDAQ:TTEK) is a leading consulting and engineering firm specializing in water, environment, sustainable infrastructure and energy solutions. The company operates across more than 100 countries, serving government agencies, commercial clients, and industrial sectors. TTEK focuses on high-end consulting and technical services, leveraging data-driven approaches and advanced analytics to address complex water management, environmental restoration, and climate resilience challenges. Its expertise spans water treatment, flood mitigation, ecosystem restoration, and smart water solutions, positioning it as a key player in the global water sector. The California-based company ranked fifth on our recent list of 16 Best 52-Week Low Stocks To Buy Now According to Short Sellers.

Tetra Tech, Inc. (NASDAQ:TTEK) achieved record results in the latest Q1 2025, with net revenue increasing 18% YoY and operating income growing 24% YoY. The company’s earnings per share increased 25% YoY to $0.35, exceeding guidance and consensus expectations, while backlog grew 15% YoY. Both segments performed strongly, with Government Services Group (GSG) revenue up 36% and Commercial International Group (CIG) delivering a 13% margin. The company saw significant growth across various sectors, with US federal clients up 32%, state and local revenues up 47%, and U.S. commercial net revenues up 7% year-on-year. International work represented over one-third of revenues, including water programs in the UK and Ireland, infrastructure services in Canada, and defense infrastructure work in the UK and Australia.

Despite recent challenges including USAID contracts being put on hold for review, management maintains confidence in the company’s fundamental drivers, citing strong demand for water design services, disaster preparedness and federal IT modernization. Management claims that water is at the forefront of recovery needs post disasters and essential to cities and growing communities across the US and internationally. Water scarcity remains a fundamental driver, with solutions needed beyond single sources including desalination, water reuse, storm water capture and other alternative water sources. These water-related drivers are expected to extend beyond 2030, supporting the company’s long-term growth prospects.

Overall, TTEK ranks 7th on our list of best water stocks to buy according to hedge funds. While we acknowledge the potential of TTEK as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TTEK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

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Disclosure: None. This article is originally published at Insider Monkey.