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American Water Works Company’s (AWK - Snapshot Report) unit Pennsylvania American Water expanded its presence in northeast Pennsylvania by acquiring two water systems for a total price of $1.65 million.

One of the properties is in Wayne County serving 1,200 residents in Salem Township while the other is in Lackawanna County serving 500 residents in Roaring Brook Township. The nearness of these properties to Pennsylvania American Water’s existing operations will allow the company to leverage its existing operation and serve more consumers in the region.

Pennsylvania American Water’s present acquisition followed a pair of water systems acquired at 2012 end. The company added one water system each in Monroe County and Pike County for a total of $1.2 million.

The American Water Works unit has been performing well and has taken the inorganic growth strategy to expand its operations. Last year the company acquired six systems and expanded its customer base.

Pennsylvania holds a very important position in American Water Works’ overall operations.  The company serves a customer base of 2.2 million in Pennsylvania and 21.7% of its 2012 regulated revenue is generated from this state.

American Water Works has fixed a long-term earnings growth target in the range of 7% to 10%. The strategic acquisitions are all geared towards achieving this goal. Besides acquisitions, the company is also making regulated investments, taking steps to develop and maintain its infrastructure and introducing new services to drive earnings.

American Water Works Company currently has a Zacks Rank #3 (Hold). We presently prefer Aqua America Inc. (WTR - Snapshot Report) having a Zacks Rank #1 (Strong Buy). American States Water Company (AWR - Snapshot Report) and Veolia Environnement S.A. (VE) also look favorable with a Zacks Rank # 2 (Buy).

Voorhees, NJ based American Water Works Company was founded in 1886. This water and wastewater utility caters to approximately 14 million residents across the country and parts of Canada.  With approximately 6,700 employees, the company’s market capitalization is $7.12 billion.

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