Consolidated Water Company’s ( CWCO Quick Quote CWCO - Free Report) usage of advanced technology in water treatment plants, strategic acquisitions and an expansion of operations in areas that have significant requirements for potable water are likely to drive its performance over the long term. Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here Growth Projection & Surprise History
The Zacks Consensus Estimate for Consolidated Water’s 2022 earnings has moved up by 9% in the past 60 days to 73 cents per share. The Zacks Consensus Estimate for 2023 earnings has moved up by 17.9% in the past 60 days to 92 cents per share.
CWCO’s long-term (three to five years) earnings growth is projected at 8.0%. Consolidated Water delivered an average earnings surprise of 35.9% in the last four quarters. Organic Growth & Acquisitions
Consolidated Water utilizes the reverse osmosis technology, one of the most advanced technologies to convert seawater to potable water, across all water treatment plants to meet the needs of customers.
Consolidated Water already has 11 desalination plants in operation in California and aims to add 10 more to meet the increasing demand. Consolidated Water aims to expand operations in complementary service industries via joint ventures, strategic alliances and acquisitions. It acquired 100% interest in Aerex Industries, Inc., a U.S. original equipment manufacturer and service provider of municipal water along with industrial water treatment. Revival of the Tourism Industry
Consolidated Water continues to observe a gradual recovery in the tourism industry. The return of tourism to the Cayman Islands has been beneficial for CWCO through the Phase 5 reopening plan. Several major airlines resumed their flights and cruise ships back to the islands.
The ongoing revival in tourism activities is going to create fresh demand for water and boost the performance of the company. Revenue Generating Contracts
In the first nine months of 2022, Consolidated Water won a couple of contracts to build water and wastewater facilities. These new contracts, along with its existing water supply contracts, will drive the performance of the company over the long term.
In May 2022, CWCO’s subsidiary, PERC Water Corporation, won an $82 million agreement to build a four million gallon per day wastewater treatment facility, which is scheduled to be operational by December 2023 and fully completed by the end of the second quarter of 2024. Consolidated Water also won a contract to design, build and operate a new 2.64 million gallon per day seawater desalination plant in George Town, which is expected to generate $20 million in revenues over the term of the contract of nearly 11.5 years. Debt Position
The Debt to Capital of Consolidated Water at the end of the second quarter of 2022 was 0.2% compared with the industry average of 49.4%. This indicates that the company is using comparatively lower debts to manage the business compared with peers.
In the past three months, Consolidated Water’s stock has surged 41.5% compared with the
industry’s growth of 17.7%. Image Source: Zacks Investment Research Other Stocks to Consider
Some other similar-ranked stocks from the same sector include
The York Water Company ( YORW Quick Quote YORW - Free Report) , Atmos Energy ( ATO Quick Quote ATO - Free Report) and Alliant Energy ( LNT Quick Quote LNT - Free Report) . The Zacks Consensus Estimate for 2022 earnings per share of The York Water Company, Atmos Energy and Alliant Energy has moved up 4.6%, 8.8% and 6.5%, respectively, year over year. The York Water Company, Atmos Energy and Alliant Energy delivered an average earnings surprise of 2.2%, 1.5% and 5.8%, respectively, in the last four quarters. In the past three months, YORW, ATO and LNT have surged 18.6%, 11.9% and 12.6%, respectively.