American Water Works
AWK
announced that its unit, Pennsylvania American Water, is going to invest $17 million to maintain its existing 11 water storage tanks and construct seven new structures. Storage tanks play a crucial role in maintaining regular flow of water to customers and ensure proper water flow for firefighting.
Pennsylvania American Water has been investing on a regular basis to upgrade its existing water and wastewater infrastructure as well as expand operations through strategic acquisitions. In the past five years, the company has invested more than $40 million to maintain, rehabilitate and construct water storage tanks. It is efficiently providing water and wastewater services to nearly 2.4 million people.
Water Industry Needs Regular Investment
Potable water supply and wastewater services on a 24×7 basis is essential for maintaining hygiene and performing daily chores. Millions of miles of pipelines, storage tanks, pumps, desalination plants, and water refineries work in tandem to deliver clean as well as potable water for meeting daily requirements.
Per the findings of the American Society of Civil Engineers, water main breaks occur every two minutes in the United States due to aging of the existing water infrastructure. Pipeline breaks result in the wastage of 6 billion gallons of potable water each day and add to the loss of water utility operators. Breaks in water mains increase the possibility of water contamination.
The only solution to the above problem is to update and replace the aging water infrastructure at regular intervals but a huge amount of investment is required to do the same. Per the Water and Wastewater Equipment Manufacturers Association, an estimated $750 billion investment is necessary to maintain and expand drinking water as well as wastewater services to meet demand over the next 20 years. Regular and systematic investment for maintaining, upgrading, and adding new water and wastewater infrastructure is quite essential.
American Water continues to make investments in its infrastructure to upgrade, enhance and maintain the same. The company has plans to invest $10.4 billion in the 2021-2025 time period and $22-$25 billion in the next decade. Apart from American Water Works, water utilities like
Essential Utilities
WTRG
are also making regular investments to upgrade the existing water and wastewater systems. Its long-term plan is to invest nearly $3 billion through 2023 to rehabilitate, and strengthen water as well as natural gas pipeline systems. Another water utility,
Global Water Resources
GWRS
is making acquisitions and the necessary investments to expand as well as strengthen operations, and upgrade the acquired assets for providing efficient services to customers.
California Water Service
CWT
plans to invest in the range of $270-$300 million in 2021 to strengthen its water and wastewater infrastructure.
Price Performance
Shares of American Water have outperformed the
industry
in the past year.
Zacks Rank
American Water currently has a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
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