A different name for this group

Sorry, no mentions of Adobe or United. But something that could actually perform with the tailwinds that utilities will face. Sit down with a tall glass of water brought to you by AWK. While many are sticking to hopium on the legacy SaaS platforms of 2021, I believe American Water can outperform the index over the next two years. AWK operates in 14 states with zero direct competition in almost every market they serve. You can’t just switch water providers. 92% of their money comes from regulated services where the government basically guarantees a return on their infrastructure investments. The growth story is in the acquisitions. They have 24 acquisitions in the pipeline worth $572 million. With 84% of U.S. water systems still government-owned, their acquisition runway is decades long. The downside of this stock of late is PFAS. The EPA is tightening on forever chemicals and AWK estimates they’ll need to spend $1 billion on new treatment facilities by 2029. In the utility world, more Capex = larger rate base. Because they are a regulated monopoly, they seek rate increases to recover those costs + margin. You are getting a compounder and a dividend growth target of 7.9% CAGR. There is some short-term noise from PFAS litigation, but that is exactly why the value is there right now. American Water Works is for anyone tired of market volatility. With a massive $42 billion investment pipeline and a guaranteed cost-recovery model, the growth is near-certain. Watch the rate case outcomes in New Jersey and Pennsylvania. As those $1 billion PFAS investments hit the rate base, the stock should re-rate significantly higher than the broader index.