Exploring Momentum Investing: Is American Water Works (AWK) a Top Pick?
Momentum investing is an investment strategy that focuses on buying stocks that have shown strong recent performance and are continuing to gain momentum. This strategy can be highly rewarding, especially in a bull market. One stock that has been generating significant momentum lately is American Water Works Company, Inc. (AWK), a leading provider of water and wastewater services in the United States. In this article, we’ll dive deeper into AWK’s financials, growth potential, and market position to determine if it’s a top pick for momentum investors.
Financials
First, let’s take a look at AWK’s financials. The company reported strong earnings for the third quarter of 2021, with earnings per share (EPS) coming in at $0.82, beating analyst estimates by $0.03. Revenue also came in above expectations, totaling $1.7 billion, a 5.3% increase from the same period last year. AWK’s net income for the quarter was $248.5 million, an impressive 17.2% increase from the previous year.
Growth Potential
Next, let’s discuss AWK’s growth potential. The company’s regulated utility business, which makes up the majority of its revenue, benefits from the essential nature of water and wastewater services. This provides a steady revenue stream and allows for reliable growth. Additionally, AWK is investing in infrastructure upgrades and expansions, which will contribute to future growth. The company’s capital expenditures for 2021 are expected to be around $1.5 billion, with a focus on improving its water and wastewater systems.
Market Position
AWK’s market position is another factor that makes it an attractive pick for momentum investors. The company operates in a highly regulated industry, which provides a stable and predictable business environment. AWK also has a strong competitive position, with a significant market share in the water and wastewater services industry. Furthermore, the company has a solid financial position, with a debt-to-equity ratio of 0.63 and a credit rating of A- from Moody’s.
Impact on Individuals
For individual investors, a strong showing from AWK could mean significant gains in their portfolio. As a momentum stock, AWK’s price could continue to rise as more investors jump on the bandwagon. Additionally, the company’s stable and predictable business model provides a level of security for those looking for a reliable investment.
Impact on the World
On a larger scale, AWK’s success could have a positive impact on the world. The company’s focus on infrastructure upgrades and expansions will lead to improved water and wastewater systems, which is essential for public health and the environment. Additionally, AWK’s growth could create jobs and stimulate economic activity in the communities it serves.
Conclusion
In conclusion, American Water Works Company (AWK) has strong financials, significant growth potential, and a solid market position, making it an attractive pick for momentum investors. With a stable and predictable business model, AWK provides both individual investors and the world at large with a reliable and essential service. As the company continues to invest in infrastructure upgrades and expansions, its momentum is likely to continue, making it a top pick for those looking to capitalize on the trend of strong performing stocks.
- Strong earnings report for Q3 2021
- Revenue came in above expectations
- Net income increased by 17.2% from the previous year
- Regulated utility business provides a steady revenue stream
- Investing in infrastructure upgrades and expansions
- Stable and predictable business environment
- Strong competitive position
- Reliable investment for individual investors
- Improved water and wastewater systems for public health and the environment
- Stimulates economic activity in the communities it serves
