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Why is Connecticut Water Service (CTWS) a Strong Buy?

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On Sep 22, Zacks Investment Research upgraded C onnecticut Water Service Inc.CTWS to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Connecticut Water Service has been witnessing rising earnings estimates on the back of strong second-quarter 2015 results. This water and wastewater service provider delivered a positive earnings surprise of 11.6% in the second quarter. The long-term expected earnings growth rate for this stock is 5.0%.

The company has a convincing long-term growth strategy backed by strong infrastructure investment. Connecticut Water Service is investing $55.1 million for infrastructure improvements in 2015. Of the total amount, $47.6 million has been allocated for its subsidiary, The Connecticut Water Company, and the remaining $7.5 million to another subsidiary, The Maine Water.

Connecticut Water Service earns nearly 93% of its earnings from regulated operations, which provides ample visibility to its earnings stream. The company is also into acquisitions like other notable players in this space to expand its customer base and service territories. In the last seven years, the company has completed 40 water system acquisitions.

Last month, the board of directors approved a nearly 4% increase in the quarterly cash dividend to 26.75 cents from 25.75 cents. Connecticut Water Service has increased its dividend payment in each of the last 46 years. This is a testament to the steady performance of this water utility.

Another operator in the water utility space, Aqua America WTR increased its quarterly cash dividend by 7.9% to 17.8 cents from 16.5 cents.

The Zacks Consensus Estimate for the third quarter of 2015 has increased 7.6% to 85 cents per share over the last 60 days. For 2015, 50% of the estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 10.7% to $2.13 per share.

Zacks Rank

Other water and wastewater services stocks worth adding to your portfolio are Artesian Resources Corp. ARTNA and Veolia Environnement S.A. VEOEY . Both currently have a Zacks Rank #2 (Buy)

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

CONN WATER SVC (CTWS): Free Stock Analysis Report

AQUA AMER INC (WTR): Free Stock Analysis Report

ARTESIAN RES (ARTNA): Free Stock Analysis Report

VEOLIA ENVIRON (VEOEY): Free Stock Analysis Report

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Zacks Investment Research

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


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

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