Reasons to Invest in American Water Works Company (AWK)

Aristotle Capital Management, LLC, an investment management company, released its “Value Equity Strategy” second quarter 2024 investor letter. A copy of the letter can be downloaded here. US markets continued their trend in the second quarter and the S&P 500 Index rose 4.28%. “Magnificent 7” drove the rally once again. The composite returned -1.55% gross of fees (‐1.61% net of fees) in the second quarter outperforming the ‐2.17% return of the Russell 1000 Value Index and trailing the 4.28% return of the S&P 500 Index. Security selection led the composite to outperform in the quarter relative to the Russell 1000 Value Index, while allocation effects detracted. In addition, please check the fund’s top five holdings to know its best picks in 2024.

Aristotle Capital Value Equity Strategy highlighted stocks like American Water Works Company, Inc. (NYSE:AWK), in the second quarter 2024 investor letter. American Water Works Company, Inc. (NYSE:AWK) is a water and wastewater services provider in the United States. The one-month return of American Water Works Company, Inc. (NYSE:AWK) was 2.33%, and its shares lost 9.09% of their value over the last 52 weeks. On July 10, 2024, American Water Works Company, Inc. (NYSE:AWK) stock closed at $132.23 per share with a market capitalization of $25.761 billion.

Aristotle Capital Value Equity Strategy stated the following regarding American Water Works Company, Inc. (NYSE:AWK) in its Q2 2024 investor letter:

"American Water Works Company, Inc. (NYSE:AWK): Founded in 1886 and headquartered in New Jersey, American Water Works is the largest and most geographically diverse water (~92% of regulated sales) and wastewater (~8%) utility in the United States. The company serves a population of approximately 14 million people across 14 states, with operations that span 53,700 miles of pipe, 540 water treatment plants, 1,200 groundwater wells, 1,700 pumping stations and 74 dams. The company expects to invest between $16 billion and $17 billion from 2024‐2028 as it replaces and upgrades infrastructure (often decades old) to improve the efficiency and sustainability of its operations.

High-Quality Business: Some of the quality characteristics we have identified for American Water Works include: · Stable and predictable revenues due to the essential need for water and its structure as a regulated monopoly with long‐term service contracts; · A history of growing cash returns to shareholders (~8.0% annualized dividend increases over the past five years); · Economies of scale that provide advantages in pursuing new customers via acquisitions; and · Constructive relationships with regulators that support timely cost recovery and the ability to gain approval for continued investments…” (Click here to read the full text)

A technician in a deep-water treatment facility, ensuring clean water for public safety.

American Water Works Company, Inc. (NYSE:AWK) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held American Water Works Company, Inc. (NYSE:AWK) at the end of the first quarter which was 36 in the previous quarter. While we acknowledge the potential of American Water Works Company, Inc. (NYSE:AWK) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

We discussed American Water Works Company, Inc. (NYSE:AWK) in another article and shared the list of best utility stocks to buy. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.