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Reasons to Add California Water (CWT) to Your Portfolio Now

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California Water Service Group (CWT - Free Report) , through its subsidiaries, provides water utility and other related services to customers in the United States. The company continues to expand operations in the Western United States through organic and inorganic initiatives.

This Zacks Rank #2 (Buy) stock is a promising bet at the moment, as strong capital investment plans to strengthen water and wastewater facilities are anticipated to drive its performance over the long run. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Growth Projections

The Zacks Consensus Estimate for 2021 earnings per share is pegged at $1.79, which has moved up 2.9% in the past 60 days.

The consensus mark for 2022 earnings has moved up 1.6% in the past 60 days to $1.85 per share.

Surprise History and Dividend Yield

California Water Service’s trailing four-quarter earnings surprise is 15.4%, on average.

Its dividend yield is currently pegged at 1.51%, which is much better than the S&P 500 group’s average of 1.39%.

Regular Investments

After investing nearly $298.7 million in 2020, it is planning a net investment of $270-$300 million for 2021. In July, the California Water Service unit filed an application with the California Public Service Commission, seeking approval for the 2022-2024 infrastructure improvement program, which contains new rate designs. Per this, it aims to invest $1.02 billion in the aforesaid time period.

The regular investments are enabling the company to strengthen the existing infrastructure and serve its expanding customers more efficiently. The customer base has increased 4.3% year over year in 2020.

Return on Equity (ROE)

ROE is a measure of a company’s financial performance and shows how it is utilizing its funds. California Water Service’s ROE is currently pegged at 15.71%, better than the industry average of 10.56%, which indicates that the company is utilizing its funds more efficiently than peers.

Price Performance

Over the past six months, the stock has returned 13%, outperforming the industry 3.7% growth.

Zacks Investment Research
Image Source: Zacks Investment Research

Other Stocks to Consider

Other top-ranked stocks in the same sector include Exelon Corporation (EXC - Free Report) , Otter Tail Corporation (OTTR - Free Report) and Middlesex Water Company (MSEX - Free Report) . Middlesex Water Company currently has a Zacks Rank #2, while the other two stocks sport a Zacks Rank #1.

Exelon, Otter Tail, and Middlesex Water delivered an earnings surprise of 27.1%, 83.7% and 5.1%, respectively, in the last reported quarter.

The Zacks Consensus Estimate for 2021 earnings per share of Exelon, Otter Tail, and Middlesex Water has moved up 0.1%, 39.2%, and 3.7%, respectively, in the past 60 days.