American Water Works' (AWK) Stock Rises on Positive Barron's Article
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Shares of American Water Works (NYSE: AWK) are feeling a boost today on the back of a positive article in this weekend's edition of Barron's. After closing last week at $20.07, American Water Works stock is up about 4% to $20.88 today.
The Barron's article presents several bullish catalysts that could send shares of the water utility company higher. First, Barron's believes that the stock looks attractive on a valuation basis: trading at just 16x forward EPS, American Water Works is being valued at a discount relative to its industry average of 22x. Also, after initially pricing at $21.50, the stock still trades under this level today. Finally, with a 4% dividend yield, Barron's points out that "investors are getting a decent payout while waiting for" fundamental issues to be worked out.
As the U.S. infrastructure for managing water resources is bad and only getting worse, Barron's top catalyst for American Water Works seems to stem from the fact that the company will be able to capitalize on this opportunity better than anyone else in the industry. One government study estimated that $1 trillion will need to be invested by 2020 in order to replaced the failing current infrastructure. Another survey on U.S. drinking water indicates that government water capital expenditures through 2022 will be as high as $280 billion, or about $20 billion a year. As the largest provider of this kind of infrastructure - serving 16 million people in 32 states - investors should easily see why American Water Works will be able to cash in.
American Water Works Company, Inc. engages in the provision of water and wastewater services to residential, commercial, and industrial customers in the United States and Canada.
The Barron's article presents several bullish catalysts that could send shares of the water utility company higher. First, Barron's believes that the stock looks attractive on a valuation basis: trading at just 16x forward EPS, American Water Works is being valued at a discount relative to its industry average of 22x. Also, after initially pricing at $21.50, the stock still trades under this level today. Finally, with a 4% dividend yield, Barron's points out that "investors are getting a decent payout while waiting for" fundamental issues to be worked out.
As the U.S. infrastructure for managing water resources is bad and only getting worse, Barron's top catalyst for American Water Works seems to stem from the fact that the company will be able to capitalize on this opportunity better than anyone else in the industry. One government study estimated that $1 trillion will need to be invested by 2020 in order to replaced the failing current infrastructure. Another survey on U.S. drinking water indicates that government water capital expenditures through 2022 will be as high as $280 billion, or about $20 billion a year. As the largest provider of this kind of infrastructure - serving 16 million people in 32 states - investors should easily see why American Water Works will be able to cash in.
American Water Works Company, Inc. engages in the provision of water and wastewater services to residential, commercial, and industrial customers in the United States and Canada.
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