(FORTUNE Magazine) – Water, like air and your mother, is one of those things everybody takes for granted--until the well runs dry. That's what happened this year when a severe drought hit the Eastern seaboard and much of the Midwest. Suddenly there's a new appreciation for the wet stuff among consumers, gardeners, and bathers. Wall Street, however, has yet to pounce. Debra Coy, an analyst with Schwab Capital Markets, says water stocks, ignored and unappreciated, should provide investors with average annual returns of 10% over the next decade.

The most obvious spot to plunk your money is in the big water utilities. The most compelling right now is Philadelphia Suburban (PSC $19), which serves two million people in six states. Its share price took a hit in May when Vivendi Environment decided to sell off its 17% stake, driving its price-to-book ratio from 3.4 to 2.7. "It's an opportunity on valuation that we haven't seen for a while," says Coy, who expects earnings to increase about 10% annually over the next few years. Add a dividend yield of 2.8%, and the returns, if not gushing, are certainly satisfying.

Toward the other end of the risk spectrum are those who are hunting for water as if it were oil. Water developer Cadiz (CLCI, $9) appears close to winning approval for a 50-year partnership with the Metropolitan Water District of Southern California for storing water to help survive future droughts. Michael Crawford, an analyst with equity research firm B. Riley in Los Angeles, estimates this project alone is worth $13.50 a share. Then there's Southwestern Water Exploration (SWWE.PK, $2), which drills for water below 1,500 feet. This Nevada company is prospecting in Colorado. T. Boone Pickens, legendary oilman and corporate raider, has a similar scheme in the works on land he owns in Texas. If Boone's record is anything to go by, Southwestern may be worth a gamble.

--Ellen Florian