It's been a while since I wrote about anything water-related, but a recent Reutersfeature on General Electric 's (NYSE: GE) water purification segment got me thinking about this business again.

You know those megatrendswe're so fond of talking about here at the Fool? GE likes pursuing these, and large-scale water treatment and purification seems to fit the bill. Desertification, inadequate sanitation, and population growth are all water-related issues that the world will increasingly face this century. Some even worry about armed conflicts, or so-called water wars, arising over contested access.

Companies such as Monsanto (NYSE: MON), PotashCorp (NYSE: POT), and Lindsay are helping to feed a swelling global population, and making shareholders happy at the same time. My hope is that the profit motive will deliver up equally positive social results -- and compelling investment opportunities -- in water.

Who's making waves?
It's entirely possible that water could eventually move the needle at a giant firm like GE, Siemens , or Dow Chemical (NYSE: DOW), but these companies won't be my focus today. Instead, I want to look at a few purer plays.

Energy Recovery (Nasdaq: ERII) is a firm that focuses on the desalination process known as seawater reverse osmosis (SWRO). Specifically, ERI produces a device that helps to reduce the high energy demands of this process. The company claims energy savings of around 60% compared to a system with no energy recovery devices installed. There are other such devices on the market, but ERI says it has the most efficient one.

I gave this firm a good lookaround the time of its initial public offering back in August of last year. The target market seemed pretty compelling, and ERI was cranking out furious top-line growth. Still, with the stock trading in excess of $8.50 per share, I had a hard time swallowing the multiple of 46 times earnings, especially in light of the firm's less-than-impenetrable intellectual property position, extreme product concentration, and lack of recurring revenue.

ERI trades about 30% lower today. If the firm's growth had kept up its steamy pace all this time, the price might be pretty interesting today. Unfortunately, trailing revenue is only up 15% year on year, while net income has ticked down. The stock's multiple to earnings remains sky-high. Clearly, someone remains optimistic about this company's prospects, but I remain cautious.

All the water in China
Across the Pacific, a different water IPO has hit pay dirt. China's Duoyuan Global Water (NYSE: DGW) priced at $16 in its June offering, and gained 37% in its first day of trading. The stock continues to soar, having recently tickled the $40 level. With a market cap of around $850 million, and trailing net income of just $11.5 million, this water treatment equipment stock is seriously expensive.

Do these guys sell equipment that turns water into gold? No, it just turns water into treated water. There are three product categories: circulating water treating equipment, water purification equipment, and wastewater treatment equipment. Continued...