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American Water (AWK) New Jersey Arm to Spend $1.6M on Upgrades

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American Water Works (AWK - Free Report) announced that its unit, New Jersey American Water, is going to invest $1.6 million to upgrade 3,400 feet of water main in Linden. The aging 6-inch cast iron water lines will be replaced with new 8-inch ductile iron main. The company will also replace three fire hydrants and 99 utility-owned service lines along the pipeline route. These essential upgrades will increase water flow for customers and ensure 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. These upgrades lower the possibility of breakage of water mains that have reached the end of effective service life.

New Jersey American Water provides high-quality and reliable water and wastewater services to nearly 2.8 million people. The company intermittently makes upgrade of old pipelines to efficiently serve customers.

Water Infrastructure Needs Investment

The U.S. water infrastructure, which includes more than 2.2 million miles of pipelines, is aging and needs major repair and maintenance to provide proper services to millions of Americans. 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.

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.

In addition, investor-owned water utilities like American Water Works, Essential Utilities (WTRG - Free Report) and California Water Services (CWT - Free Report) , among others, are making substantial investments on an annual basis to upgrade as well as maintain the aging infrastructure. 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.

Price Performance

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

Zacks Investment Research
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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.