Watts Water Technologies (WTS): A Hidden Data Center Stock in Billionaire Mario Gabelli’s Portfolio
Watts Water Technologies (WTS) reported 12% organic sales growth in Q2, driven by data center demand, which rose to 8% of sales. Management expects Q3 growth to slow to 5-8%. The company trades at a forward P/E of 28.5, above its sector and historical averages. Analysts project 20% EPS growth in 2026 and 10.5% in 2027. Billionaire Mario Gabelli's fund includes WTS in its top 10 stock picks.
How this was made
The 30-second read
Why it matters
The new guidance and rising data‑center sales suggest a shift in revenue mix, offering a catalyst for the stock while margin pressure tempers enthusiasm.
Market read
First‑time disclosure of data‑center sales share and Q3 guidance provides actionable insight for traders focusing on industrial and ESG water‑tech stocks.
What to watch
Potential supply‑chain constraints for cooling components and the cyclical nature of data‑center capex may limit sustained growth.
Background
Watts Water Technologies (NYSE:WTS) supplies valves, leak protection, and water‑filtration products. The firm is highlighted in Mario Gabelli's portfolio as a hidden data‑center play.
Ticker impact
Watts Water Technologies disclosed that data center sales rose to 8% of first‑half revenue and raised its Q3 organic sales guidance to 5‑8%, highlighting a new growth driver.
potential modest upside as investors price in higher data‑center demand, offset by pressure from margin decline
The article provides fresh guidance and segment growth numbers, which are material for short‑term pricing, while margin weakness introduces downside risk.
Market effects
Highlights growing demand for water‑infrastructure products in AI‑driven data centers, potentially benefiting peers in the water‑management sector.
European sales showed 9% organic growth, indicating regional tailwinds that could lift broader European industrial stocks.
Data‑center cooling trends may influence global water‑technology suppliers and related ESG investment themes.
Counterpoint
Margin compression and exposure to geopolitical cost pressures could outweigh the data‑center growth narrative.
Key entities
- companyWatts Water Technologies
US‑listed water‑infrastructure manufacturer (ticker WTS).
- individualMario Gabelli
Billionaire investor whose fund holds WTS.
