Aqua America Retakes 10-Week Line, Works On New Base


Aqua America ( WTR ), a major water utility, has retaken its 10-week moving average and is building a new base.

The company offers a combination of steady capital gains and dividend growth. The stock is up 25% this year and 23% over the past 52 weeks, outpacing the S&P 500.

The Bryn Mawr, Pa.-based utility serves residential and commercial customers in 10 states, mostly in the East and South. Like rivals such asAmerican Water Works ( AWK ), Aqua America has been growing through acquisitions.

"Large operators like Aqua America find it easier to expand their footprint via strategic acquisitions," Zacks Equity Research said in a July 2 note.

"We believe consolidation in a way will help the water utilities to generate incremental revenue and invest more towards the maintenance and development of old water systems," said Zacks, which has a "buy" rating on the stock.

The company has a 97 Earnings Per Share Rating, reflecting double-digit earnings and sales growth or better in recent quarters.

First-quarter profit jumped 53%, though that was down from the prior quarter's 130% gain. Second-quarter earnings are seen slowing further, to a still-respectable 23%.

Revenue growth has ranged between 10% and 12% over the past four quarters. For all of 2013, Aqua America's earnings are expected to rise 7% to $1.41 a share.

Meanwhile, Aqua America has paid a dividend for more than 65 years. In May, it increased the quarterly payout by 8% to 19 cents a share. That's 76 cents a share annually, good for a yield of 2.4%.

The stock is working on the right side of a new base after retaking its 50-day line Monday. It had previously run up 23% after breaking out in January from a 27.03 flat-base buy point.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Investing Ideas

Referenced Stocks: AWK , WTR

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