American States Water (AWR) to Gain From Systematic Investments

Core Viewpoint - American States Water Company (AWR) is strengthening its infrastructure through strategic investments, but its heavy reliance on California for earnings poses challenges [1][4]. Group 1: Tailwinds - AWR has a robust utility customer base, with a steady increase in electricity and water utility customers [2]. - The company plans to invest $611.4 million in capital expenditures from 2025 to 2027 to enhance its infrastructure [2]. - AWR's subsidiary, American States Utility Services (ASUS), has secured long-term contracts at military bases, including a $349 million contract at Naval Air Station Patuxent River and a $75 million contract at Joint Base Cape Cod, providing earnings stability [2][3]. Group 2: Headwinds - AWR's operations are heavily concentrated in California, making its financial performance vulnerable to various risks, including political, regulatory, and environmental factors [4]. - The company faces potential groundwater contamination risks, which could lead to additional costs for remediation [4]. Group 3: Price Performance - Over the past month, AWR shares have decreased by 1.3%, slightly better than the industry's decline of 1.4% [5]. Group 4: Stocks to Consider - Other companies in the sector with better rankings include California Water Service Group (CWT) and Primo Water (PRMW), both rated Zacks Rank 1 (Strong Buy), and IDACORP (IDA), rated Zacks Rank 2 (Buy) [8]. - CWT's 2024 EPS is expected to grow by 246.2% year over year, while PRMW has a long-term earnings growth rate of 15.47% [8].