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Companhia de saneamento Basico Do Estado De Sao Paulo - Sabesp (SBS) - $25 value - yours FREE >>
Artesian Resources Corporation (ARTNA) - $25 value - yours FREE >>
Consolidated Water Co. Ltd. (CWCO) - $25 value - yours FREE >>
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SABESP Shows Growth Potential on Vast Clientele & Demand
We issued an updated research report on Companhia de Saneamento Basico do Estado de Sao Paulo (SBS - Free Report) or SABESP on Jun 21, 2016. The company is one of the leading water and sewage services providers in the Brazilian state of Sao Paulo with solid growth potential.
Below we discuss few major growth drivers for the company.
Wide Coverage Area: SABESP provides its services in the state of Sao Paulo, which includes one of the largest cities in the world. Roughly 50.3% of the company’s shares are held by the Sao Paulo government. With population growth in Brazil, demand for better water and sewage services is on the rise, favoring SABESP. Exiting first-quarter 2016, the company served nearly 364 of total 645 municipalities in the state.
Vast Customer Base: SABESP benefits from its vast clientele. Exiting first-quarter 2016, the company’s water and sewage connections were approximately 8.5 million and 6.9 million, respectively while it served nearly 25.6 million customers for water and 22.9 million for sewage, representing a year-over-year growth of 1.2% and 1.8%, respectively.
Long-Term Targets: We believe a wide coverage area and growing demand for its services will prove to be a boon for SABESP in the years ahead. The company targets to achieve 95% sewage coverage ratio and add 1.4 million new sewage connections by 2020 and nearly 1 million water connections by 2021. Also, the company has planned investments worth R$12.5 billion for 2016−2020, including R$5.6 billion on water, R$4.5 billion on sewage collection and R$2.6 billion on sewage treatment.
Conclusion
SABESP currently carries a Zacks Rank #2 (Buy). We believe the above-mentioned pros and cons clearly justify the company’s investment value.
Some similarly-ranked stocks in the utility industry include Artesian Resources Corp. (ARTNA - Free Report) , Connecticut Water Service Inc. and Consolidated Water Co. Ltd. (CWCO - Free Report) .
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