On Jan 15, Zacks Investment Research upgraded
Aqua America Inc.
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
The company has registered earnings surprises in the last two
quarters with an average beat of 5.0%. The long-term expected
earnings growth rate for this stock is 6.87% In addition,
the acquisition driven growth strategy makes it even more likely
for the company to deliver another earnings beat in the fourth
Aqua America has completed around 200 acquisitions in all and in
2012 alone it clinched 18 acquisitions. These tuck-in deals have
expanded its operations and increased the customer base. The
company seems indefatigable when it comes to acquisitions and has
already completed three such deals at the start of 2013.
Besides acquisitions Aqua America's continuous investment in
development and maintenance of its infrastructure has improved
the water quality and consistency of service. The company's $300
million capex target for 2012 is a testament to the company's
commitment to upgrade its existing operations.
Consistent dividend payments for the past 66 years make the
shares attractive. An annual dividend of 67 cents per share
results in a dividend yield of 2.63%, higher than the industry
average of 1.83%.
The Zacks Consensus Estimate for 2012 of $1.09 per share reflects
year-over-year growth of 16.4%. For 2013, the Zacks Consensus
Estimate of $2.71 per share reflects growth of 9.04% from the
Other Stocks to Consider
Other than Aqua America, a few other water utilities are also
performing well and have a favorable Zacks Rank. Overall the
consistent infrastructural upgrades and cost cutting initiatives
of the utilities will continue to boost performance in the
upcoming quarters. The stocks worth considering are Zacks Ranked
Connecticut Water Service Inc.
) and Zacks Ranked #2
American Water Works Company Inc.
AMER WATER WORK (AWK): Free Stock Analysis
CONN WATER SVC (CTWS): Free Stock Analysis
AQUA AMER INC (WTR): Free Stock Analysis
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