California Water Service Group
CWT
began installing new water main on the streets of Dolores and Eureka to provide a continuous supply of safe and reliable water to its customers in northeast Bakersfield. The work is likely to be completed in August 2021.
Per the project, the company will replace the old and the aging 4-and-2-inch pipes with 4,100 feet of new 4-, 6- and 8-inch PVC water pipes. Also, this upgrade will fulfill the emergency needs of firefighters and the company will install five new fire hydrants. The larger pipe diameter will benefit the community from an increase in water flow.
To ensure reliable water and wastewater services, the company is focused on renovating its aging infrastructure. Earlier this month, the company began enhancing its water infrastructure in western Torrance. In March, it completed a water infrastructure upliftment in Hamilton City to increase its reliability by providing high-quality services to its customers.
Strengthening Operations Via Investments & Acquisition
The company is making steady efforts to grow either organically or inorganically. Washington Water Service, a unit of the utility, inked a deal to operate and maintain Stroh’s Water Company’s water system while another unit California Water signed an agreement to acquire the water system assets of Skylonda Mutual Water Company. Notably, California Water invested $298.7 million in 2020, up from $273.8 million in 2019. Its capital expenditure estimate for 2021 is $270-$300 million.
Need for Investments in Water Space
Delay in revamping the pipelines could result in loss of water on a daily basis while pipeline cracks might increase the possibility of potable water contamination. Per the Water and Wastewater Equipment Manufacturers Association, an estimated investment of $750 billion is needed to meet demand over the next 20 years.
The aging U.S. water and wastewater infrastructure requires bulk expenditure to ensure 24×7 supply of drinkable water and continuous wastewater services. Hence, large water utilities are actively investing heavy capex in enriching their quality of services.
American Water Works Company
AWK
has plans to invest $10.4 billion in the 2021-2025 time period and $22-$25 billion in the next decade.
Global Water Resources, Inc.
GWRS
is also taking the organic and the inorganic route to expand its operations in the United States. Another water utility
Essential Utilities
WTRG
aims to invest $3 billion through 2023 to fortify operations and efficiently serve its expanding customer base.
Zacks Rank & Price Performance
Shares of this currently Zacks Rank #2 (Buy) utility have gained 29.6% in the past six months, outperforming the
industry
’s rise of 7.6%. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
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