Xylem Inc. (0.8%) (XYL)($34.60 - NYSE) is a global leader in the design, manufacturing, and application of highly-engineered technologies for the transportation, treatment, and testing of water. The company is expected to benefit from favorable long-term fundamentals in the water industry, driven by scarcity, population growth, aging of the infrastructure, and the need to improve water quality. Further, with a large installed base of pumps and systems, the company is well positioned to increase aftermarket revenue, which currently represents roughly 40% of total revenues. Xylem's attractive business mix also generates strong cash flow, which is expected to support acquisitions, debt service, and dividend growth. Concerns regarding weakness in Europe and municipal spending levels in the U.S. remain, although we believe the long-term fundamentals outweigh these concerns.
From the Gabelli Value 25 Fund fourth quarter 2013 commentary.