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American Water's (AWK) Arm to Invest $22M in Water Treatment

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American Water Works (AWK - Free Report) announced that its unit Indiana American Water Company is going to invest $22 million in a water treatment facility in Mooresville, IN. The new treatment facility will add filtration to remove iron and manganese from the area’s groundwater source, replace the existing backup power generator, and add new pumping and disinfection equipment along with a 500,000-gallon finished water storage tank.

The plant will be able to provide nearly 3 million gallons of filtered drinking water and can be easily expanded when required in future. This new water treatment facility is expected to come online by September 2022. The water treatment plant will allow the company to significantly improve the quality of water it provides to customers. 

Water Industry Needs Investment

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.

We receive 24X7 supply of water in our taps due to concerted efforts of million miles of underground pipelines, pumping stations, storage tanks and water treatment facilities. So, it is quite essential to address the needs of the water industry so that the water treated in the treatment plants does not get wasted.

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.

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Zacks Rank

American Water currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.