American Water (AWK) to Invest in Cinnaminson Water Mains
American Water Works AWK announced that its unit, New Jersey American Water, is going to invest $0.9 million for improving the water infrastructure in Cinnaminson. The company plans to replace more than 4,530 feet of aging water main with new 6- and 8-inch ductile iron main, and replace three fire hydrants as well as 80 utility-owned service lines along the pipeline route. All these upgrades will ensure an increase in water flow for customers and adequate supply of water for fire fighters.
New Jersey American Water regularly invests to upgrade, maintain and expand the existing infrastructure. This project is part of its multi-million-dollar initiative to improve the quality of water and wastewater infrastructure. New Jersey American Water is providing high-quality and reliable water and/or wastewater services to nearly 2.8 million people in New Jersey.
Aging Water Infrastructure a Concern
The existing water and wastewater infrastructure of the United States is aging and gradually approaching toward the end of their effective service life. However, aging of pipelines, and resultant breaks in water and wastewater mains are primary concerns that may disrupt utility services.
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 possibility of contamination.
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.
Utilities are Carrying Out Investments
Fragmentation of the water and wastewater industry is a concern, as small providers at times do not have the essential funds to carry out costly infrastructure overhauls. However, a few large utilities are trying to acquire small units and make the necessary investments in infrastructure.
American Water continues to make investments in its infrastructure to upgrade, enhance and maintain the same. The company has plans to invest $10.4 billion in the 2021-2025 time period and $22-$25 billion in the next decade.
In addition to American Water, water utility California Water Service CWT plans to invest in the range of $270-$300 million in 2021 to strengthen its water and wastewater infrastructure. Another water utility, Middlesex Water MSEX — under the Water for Tomorrow program — is making regular capital investments to enhance system reliability, resiliency and overall service quality. Essential Utilities WTRG is also making regular investments to upgrade the existing water and wastewater systems. Its long-term plan is to invest nearly $3 billion through 2023 to rehabilitate, and strengthen water as well as natural gas pipeline systems.
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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Middlesex Water Company (MSEX) : Free Stock Analysis Report
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Essential Utilities Inc. (WTRG) : Free Stock Analysis Report
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