THE SHAPE of WATER: Dirty pipes and clean living position Winston-Salem s Primo Water for pure prosperity.

• Author: Mildenberg, David

When Matt Sheehan joined Primo Water Corp. in December 2012, the Winston-Salem-based company had lost about $45 million in the previous five years, and its stock had slid from its initial public offering price of $12 in 2010 to about 70 cents. The company's balance sheet was stressed, and so was founder Billy Prim, who had separately developed the Blue Rhino propane-tank exchange company before its $340 million sale in 2014.

Sheehan, who started at Primo as a consultant, says he wasn't worried because of the underlying prospects for the bottled-water industry. Primo's failed diversification into the flavored-drink business, dominated then and now by Israel-based SodaStream International Ltd., had unnerved the company's investors. While the financials looked like a mess, Sheehan saw opportunity. His background in niche retailing--movie vendor Redbox grew from 100 kiosks to 35,000 during his six-and-a-half-year tenure--impressed Prim.

"I usually drive all of my investing decisions on two things: Does it have the right trends, and does it have the right people?" says Sheehan, 44- On the personnel side, "I saw that Billy had people who were very loyal during a couple of tough years."

But the main, unmistakable attraction was Primo's prime position in selling clean water. After all, "drink more water" has joined "eat more vegetables" and "get plenty of sleep" as a societal mandate for increasing numbers of health-minded consumers. Few, if any, enterprises are better poised to exploit that trend than Primo, Sheehan says.

His hunch is paying off. Primo's annual revenue has tripled over the last four years to more than $300 million, bolstered by the 2016 acquisition of Vista, Calif.-based rival Glacier Water Services Inc. for about $273 million. Glacier has machines that refill 1-gallon water jugs in about 20,000 locations in all 50 states. Primo shares traded at $16 in mid-October, more than 20 times the price when Sheehan showed up nearly six years earlier.

Investors are lapping up Primo because better health is just one of the megatrends propelling the company's growth. The biggest may be the "Flint effect," referring to the lead-tainted water crisis in the depressed Michigan city that sparked a federal emergency declaration in 2016 urging residents to stop drinking tap water. While the Flint tragedy centered around terrible decision-making by local and state environmental officials, it signaled a much bigger, national concern about the quality...