Analyst Winter Picks Two in Water Utilities

April 22, 2009

As part of our special focus on Water Utilities, we spoke with analyst Timothy Winter of Jesup & Lamont Securities Corporation. He gaves 2 picks that he feels are worth investors attention in the Water Utilities space:

  • American Water Works (AWK)- “It trades at 12.5 times 2010 numbers and 118% of book value versus the group, which is at 17 times forward numbers and 175% of book, so on a valuation perspective, it’s very, very attractive. The fundamentals of AWK are just as strong, and one could argue stronger, than some of the others in the group, given that they are in the process of filing rate increases for the neglected systems from the RWE ownership days. So there is going to be some accelerated earnings growth over the next couple of years.”
  • Aqua America (WTR)- “The CEO is absolutely fantastic. The company’s track record is second to none. And they’ve grown bigger, they’ve expanded from the Upper Midwest and the Northeast into the Carolinas and Florida and Texas as of recently — when I say recently, I mean the last few years — to continue their long-term strategy, which is to be the best consolidator and the best operator. And I think we have earnings growth returning to their historical 10% per year growth rate that investors enjoyed from about 1992 through 2006 before they had to take some time to digest the strategic acquisitions in the Carolinas, Florida and Texas.”

For the complete Water Utilities report, including a full interview with Mr. Winter, as well as interviews with other analysts in this space, click here.