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American Water's Unit to Invest $4.1M to Replace Water Mains

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American Water Works (AWK - Free Report) announced that its subsidiary, New Jersey American Water is going to invest $4.1 million for replacing more than 10,300 feet of aging water mains in Ocean City. The upgrades will include replacing 12 fire hydrants and 406 utility-owned service lines along the pipeline route. Through this project, the company will upgrade pipelines that are more than 100 years old and require replacement.

The Ocean City water infrastructure upgrade will improve reliability among customers, and increase water flows for household consumption as well as fire protection in this community.

Aging Water Infrastructure

The U.S. water and wastewater infrastructure is aging and gradually nearing toward the end of effective service life. Large amount of investments are essential for upgrades, repair and addition of new pipelines to support the aging systems.

According to the American Water Works Association, an estimated $1 trillion investment is necessary to maintain and expand the drinking water service to meet demand over the next 25 years. So, huge efforts are needed from private operators and funding is required from government agencies to upgrade and maintain the aging water, as well as wastewater facilities.

Large water utilities operating in the United States are making systematic investments to upgrade and repair old pipelines. American Water has been investing regularly to strengthen its water and wastewater infrastructure. The company has plans to invest $8.8-$9.4 billion in the 2020-2024 time period and $20-$22 billion in the next decade.

In addition to American Water, Essential Utilities (WTRG - Free Report) is also making regular investments in water and wastewater systems. Its long-term plan is to invest $2.8 billion in the 2020-2022 time period to rehabilitate and strengthen the existing water and natural gas pipeline systems. Another water utility, California Water Service (CWT - Free Report) recently completed the Palos Verdes Peninsula Water Reliability Project that will help to support the existing 60-year-old drinking water pipeline and provide assistance to the system during natural disasters. The company aims to invest nearly $809.0-$828.0 million in the 2019-2021 period to strengthen its infrastructure.

Price Performance

Shares of American Water have outperformed the industry in the past 12 months.

Zacks Rank & Another Key Pick

American Water Works currently has a Zacks Rank #2 (Buy). Another top-ranked stock in the same industry is Primo Water Corporation (PRMW - Free Report) , which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Primo Water delivered an average earnings surprise of 34.4% in the last four quarters. The Zacks Consensus Estimate for its 2020 earnings has moved 21.2% upward to 40 cents per share in the past 90 days.

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