Connecticut Water Hits A 52-Week High On Rising Demand

Water and wastewater service provider Connecticut Water Service Inc. (NASDAQ:CTWS) hit a new 52-week high of $56.62 before closing the Jul 1 session a tad lower at $55.59. The stock has delivered an impressive one-year return of about 67.2% while the S&P 500 returned 1.9% over the same time period.

Over the past 52 weeks, Connecticut Water Service’s share price has ranged from a low of $33.15 to a high of $56.62. Average volume of shares traded over the last three months is approximately 48,283.

Why is Connecticut Water Service Moving Up?

Connecticut Water Service is well positioned to benefit from strategic acquisitions of smaller water service providers. In the last seven years, the company has made 40 acquisitions, all in sync with its expansion plans. Acquisitions made since 2012 have increased its customer base by 37%.

Overall, contributions from organic and inorganic assets have placed the company on a strong financial footing. The company has been able to consistently increase its regulated customer base, which has spurred the volume of water used. In 2014, Connecticut Water Service’s customers used 9.4 billion gallons of water, which increased to 9.8 billion gallons at the end of 2015.

Connecticut Water Service derives nearly 92% of its earnings from its regulated operations. Thanks to consistent investments in its regulated operations, this water utility is being able to reliably serve its expanding customer base. The company aims to invest nearly $150 million in the 2016 to 2018 time frame to strengthen its existing water infrastructure.

With the interest rate expected to remain low for the time being, it will be hugely beneficial for this capital intensive utility. Connecticut Water Service has shown strong financial discipline in managing its funds. As a testimony to that, the rating agency Standard & Poor’s has affirmed its ‘A’ corporate credit rating on the company. Strong credit rating will also help this water utility to arrange funds for its capital projects at a favorable rate.

Connecticut Water Service currently carries a Zacks Rank #2 (Buy). Other well-ranked stocks in the water utility space are Companhia de Saneamento Basico do Estado de Sao Paulo (NYSE:SBS) , Artesian Resources Corp. (NASDAQ:ARTNA) and Consolidated Water Co. Ltd. (NASDAQ:CWCO) , all carrying a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>