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Green & Gold Fund Recommendation: HOLD Xylem, Inc.

Green & Gold Fund Recommendation: HOLD Xylem, Inc. Xylem Position in Fund. Purchased 300 shares on February 23, 2012 @ 27.56 per share. ($8,268) Currently @ 27.98 per share. ($8,394) $126 gain. High @ 28.73 on March 15. Low @ 23.16 on July 16. Growth Drivers. Water Industry Overview.

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Green & Gold Fund Recommendation: HOLD Xylem, Inc.

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  1. Green & Gold FundRecommendation: HOLD Xylem, Inc.

  2. Xylem Position in Fund • Purchased 300 shares on February 23, 2012 @ 27.56 per share. ($8,268) • Currently @ 27.98 per share. ($8,394) • $126 gain High @ 28.73 on March 15 Low @ 23.16 on July 16

  3. Growth Drivers Water Industry Overview Global Water Sector Population Growth Supply Shrinking due to Pollution Industrial Expansion Urbanization Infrastructure Replacement/Upgrade • $425 Billion • 4% to 6% defensive long-term growth • Movement towards Global Water Oligopoly

  4. Technology

  5. Xylem Company Profile • Spun off from ITT in 2011 • Xylem (XYL) is a leading global water technology provider. • Transport • Treat • Test • Public Utility • Industrial • Agricultural • Operates in 150 countries • 12,500 employees worldwide

  6. Xylem Inc.

  7. Develop more water treatment systems. How does Xylem contribute to solving the water crisis? Challenges: XYL Solution: Making water from multiple sources safe to drink. Growing scarcity and populations. Reuse and Recycle water. Using less energy to transport water. Modernize the water system.

  8. Financial Highlights • XYL has continued to increase revenue over the past few years through strategic acquisitions, even with slower revenue growth in Europe. • Strong free cash flow opens the door for future acquisitions or an increase in the dividend payout.

  9. Comparables Analysis • XYL & PNR are strong compared to peer group.

  10. XYL Investment Information

  11. Xylem highlights from February 2012 to January 2013 • XYL stock has been fairly stationary since we bought the stock and is currently $0.42 above where we bought it. Why? • Revenue did not increase at the expected rate in developed markets, especially Europe. • Losses in foreign exchange conversions. • However, acquisitions, which did better than planned, are expected to continue throughout 2013.

  12. SWOT Analysis

  13. Investment Thesis • In order to maintain exposure in the growing water sector, we should hold Xylem Inc. due to their use of technology and more than 90% of their revenues coming from water. The global recession has prevented the takeoff we originally expected. However, as economies recover and more nations require infrastructure upgrades, we expect XYL’s stock price to increase.

  14. Portfolio Placement • Sector : Industrials and Materials • Industry Group: Water • Current Holdings: XLI, XME, GE, UPS, SAND, XYL • Target Sector Allocation: 8.23%, $44,491 • Current Sector Allocation: 10.98%, $59,357 • Remaining Allocation: (2.75)%, $(14,866) • HOLD 300 shares of XYL. ($8,388, 1.49% of portfolio, 13.59% of sector) • year end target price: $32.00

  15. One Year Stock Chart

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