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California Water's (CWT) Arm Upgrades Water Main in Bodfish

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California Water Service Group (CWT - Free Report) announced that its unit California Water Service has completed the water main replacement project in Bodfish to ensure consistent flow of water. The work included installing 2,700-feet new 6-inch PVC water main and 33 new individual service connections along with seven fire hydrants to improve the water flow for firefighters.

Replacement of the aging water mains is quite essential to ensure water quality and system pressures as well as to increase its system resilience. California Water Service is efficiently managing the upgrade and maintenance work of its weathered infrastructure and is making systematic investments to fortify its infrastructure. After investing $298.7 million in 2020, the utility spent $138.5 million in the first six months of 2021. The company reaffirmed its 2021 capex estimates within the $270-$300 million range.

Need for Investments in Water Space

The U.S. water infrastructure has more than 2.2 million miles of pipelines, of which a substantial portion is wearing away and needs major repair to improve its services. Per the findings of the American Society of Civil Engineers, water main breaks occur every two minutes in the United States, inducing wastage of 6 billion gallons of potable water each day. This not only increases the cost of water services for the utility operators but also involves high risk of potable water contamination.

Per the U.S. Environmental Protection Agency, an estimated $750-billion investment is necessary to sustain and expand drinking water as well as wastewater services to meet demand over the next two decades. Thus, the industry requires a chunk of expenditure to ensure 24x7 supply of drinkable water and continuous wastewater services.

Hence, large water utilities are actively investing in enhancing their quality of services. American Water Works Company (AWK - Free Report) has plans to invest $10.4 billion in the 2021-2025 time period and $22-$25 billion in the next decade. Middlesex Water Company (MSEX - Free Report) has plans to pump $314 million into strengthening its water and wastewater infrastructure during the 2021-2023 time period. Another water utility American States Water Company (AWR - Free Report) expects to spend in the range of $125-$135 million on regulated utilities for the current year.

Price Performance

Shares of the utility have gained 31.1% in the past year, outperforming the industry’s rise of 10.8%.

One Year Price Performance

Zacks Investment ResearchImage Source: Zacks Investment Research

Zacks Rank

The company has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.