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American Water (AWK) to Invest $1.3M in Linden Water Mains

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American Water Works (AWK - Free Report) announced that its unit, New Jersey American Water, is going to invest $1.3 million for improving the water mains in Linden. The company plans to replace more than 3,100 feet of aging 6-inch water main with new 8-inch ductile iron main, and five fire hydrants as well as 83 utility-owned service lines along the pipeline route. All these upgrades will ensure an increase in water flow for customers and adequate supply of water for fire fighters.

New Jersey American Water regularly invests to upgrade, maintain and expand the existing water and wastewater infrastructure. This project is part of the multi-million-dollar initiative to improve the resilience of its infrastructure. New Jersey American Water is providing high-quality and reliable water and/or wastewater services to nearly 2.8 million people in New Jersey.

Investment in Aging Water Infrastructure

Water and wastewater infrastructure of the United States is aging, and is nearing the end of its effective service life. Millions of miles of pipelines, water storage tanks and water purifiers work in tandem to provide uninterrupted water supply. However, aging of this essential infrastructure is a big concern.

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. The pipeline breaks not only increase the cost of water services but also expose it to the possibility of contamination.

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.

Investment by Utilities

Amid pipeline breaks due to aging, water utilities are doing their part in upgrading the old infrastructure. Despite the ongoing investment, some water main breaks occur as small water and wastewater service providers are unable to make timely investments to upgrade the aging infrastructure.

Some large water utilities like 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.

In addition to American Water, water utility California Water Service (CWT - Free Report) plans to invest in the range of $270-$300 million in 2021 to strengthen its water and wastewater infrastructure. Another water utility, Middlesex Water (MSEX - Free Report) — under the Water for Tomorrow program — is making regular capital investments to enhance system reliability, resiliency and overall service quality. Essential Utilities (WTRG - Free Report) is 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.

Price Performance

Shares of American Water have outperformed the industry in the past year.

Zacks Investment ResearchImage Source: Zacks Investment Research

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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