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American Water Works Company, Inc. (AWK)
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From June 22, 2022:
NextEra Energy (NEE) owns the country's largest regulated electric utility, Florida Power and Light.
"NextEra Water has major national ambitions".
"The acquisition of the Towamencin wastewater system furthers our goal of creating a national water utility, NextEra Water president Bruce Hauk said in the press release."
If NEE becomes aggressive, they might like to buy AWK, that has operations in 24 states, and serves 14 million customers.
They are proactive and well run
Might NEE offer a nice premium to the market price?
This is a fun RUMOR that I am starting, but a buyout would face huge resistance from state PUCs.
What do you guys think?
I'm 25, just bought my first 4 shares, gonna hold this for 90 years and keep adding more along the way.
France company announced that they are able to make fresh drinkable water from thin air
they have created the product already and its on tv
Will hold for 20 years minimum
PE ratio has come down substantially, but still selling @ 29 x the 2022 high estimate of $4.50 per share.
The good news is that the dividend yield is rising :)
I read Steve W post of 2y ago and found it exceptional. For that reason I decided not to get in for a capital gain, despite all the positive points raised on the board. Steve W and others may be interested in viewing a video I found on the Kitco site, which follows gold, interest rates, among other things. The video concerns comments by Steve Hanke, John's Hopkins economist, among other things, on inflation, interest rates, the monetary supply, gold and the failure of Powell to account for the monetary supply.
AWK just sold $800M of notes that will be used for expansion and infrastructure replacements.
Add that cash to the $1.275B, $608M, and new gov't funds and you get $2.7B of available funds for expansion and system upgrades.
Seems like a great company. I've been watching for sometime. With a 2022 PE of around 36 why should I buy in at this level? Seems like it's just a matter of time before this feels the wrath of this bear market.
AWK just announced a dividend increase of 8.7% to $.655 per quarter
sold a bit at those 180s highs, got stuck at that next dip in March, closed position mid 160s. P/E too high
I wonder how the poor soul who was on the buy end of the after hours trade at $171.90 last Friday feels today ?
ATTN Stephen: I started a similar discussion addressing AWK's Pe/Multiple/Valuation about a week ago.
Since ValueLine seems to agree with my assumption that AWK is overvalued at this point, I thought I'd continue the discussion with a new post.
**If anyone disagrees with any or all of this, instead of just giving me a thumbs down, I'd love to hear your opinion**
My feeling is that the stock 'overvalued’ right now, largely due to the fact that the US & the rest of the world are in a historically low interest rate cycle.
When the cycle will change, is anyone's guess ? Historically, utility stocks do better when interest rates are low. The reason. When interest rates are high, people can simply park their money in cash, or put it in CD’s, which, at that time, offer a good return, & are also FDIC insured. (Decent return, zero risk)
In other words, competition for utility stocks.
I got 7.00% per year on a 1-year CD as recently as 2001
Compare that to today. According to NerdWallet, cd rates are about 2.50% for 1 year, & only rise to about 2.80% for a 5 year.
Here’s a 35 year chart of AWK’s PE ratio & a 45 year chart showing bank cd rates.
When interest rates are ow, people, who for whatever reason, are leery of the financial markets, can't get a decent return on fixed income investments, like the aforementioned money markets, & CD’s, become more aggressive, & invest in utility stocks, because those have the reputation of being stable/safe.
As rates go lower & lower, more people are willing to take some risk, & invest in companies like AWK.
This feeds upon itself. As more people buy in, it drives up the share price, which lowers the yield, but increases the overall performance of the stock.
As the next group of people looking for more stable/safe investments look at a chart of a AWK, they say wow, this ‘utility company’ is up 145% in the last 5 years, crushing the S&P 500’s return of 45%, we have to own the stock! So they start buying.
It can even attract momentum/growth investors. Anyone else remember earlier this year, or late last year, a couple people here started complaining that the stock had stalled in the 80s ? I'd be willing to bet those were growth/momentum investors.
Because of the stocks tremendous performance, the yield is now only 1.60%, but when you take into account that dividends are taxed at a lower rate than interest, & the fact that that yield isn't much lower than a one year cd, people continue to pile in.
I think you could call it the snowball effect.
People won’t like this, but history has a tendency of repeating itself.
I have no idea when it will happen, but I believe they'll come a day when interest rates get back to a more historical average, & when/if that happens,
AWK won’t be selling anywhere near 34 x earnings, & the yield will go up substantially.
All of the above is nothing more than food for thought. I'm not looking to argue with anyone, just hoping to hear different opinions.
Full disclosure: Since I have no idea when this interest rate cycle will turn, I’m not selling. I have a total of 354.308 shares with a cost basis of $36.57 I haven't reinvested dividends since March 2016 when it was in the mid 60’s. Admittedly, that's cost me a substantial amount of money, but it's the discipline I use in my taxable brokerage account. When any individual stock reaches a certain percentage of total account value, I start taking the dividends in cash.
Since Q4-2015 (5 years ago), American Water Works Company, Inc. has risen in value from $50.00 to $152.25 per share — UP by 204%.
And — Since Q4-2015 (5 years ago), American Water Works Company, Inc. has raised its dividend from $0.35 to $0.55 per share — UP by 57%.
American Water Works Company, Inc., AWK, has made numerous acquisitions to grow its customer base.
The 5-Year Chart is absolutely beautiful. For myself, this is a long-term buy & hold stock. LOAD UP “Big League” on AWK and sleep like a baby.
As is tradition: Great earnings. Stock drops. Holding since 2015 (in the 50's!) and will do so thru retirement.
On 1/1/2022, AMT will receive about $600M from the sale of NY Am Water.
They sold insurance business for $1.275B.
$455M has been received, with the remaining spread over 4 years, with 7% interest added.
The federal gov't will pass out many millions to remove all lead water lines.
When they are connecting those new lines to the street mains, they could replace any of those mains that are reaching their useful life end.
This is a lot of cash that needs to be redeployed quickly, with more coming.
I expect many small town purchases, and consolidations, that will add up to significant growth for the next five to ten years.
These small town water/waste systems are struggling to maintain their pipelines and processing facilities.
Everybody wins when AWK takes over.
GNOME ON THE RANGE
I plan to take advantage of this non-friendly (interest rates) stock utility environment and will continue to buy/add small lots of shares to my existing positions (retirement accounts) whenever possible. The benefit of being an investor and not the trader that believes they can always time the bottom.
The Infrastructure Investment and Jobs Act includes $48.4 billion over five years for drinking water and wastewater spending at the U.S. EPA. Fix those leaks, its estimated that there is a water main break every two minutes with an estimated 6 billion gallons of treated water lost each day in the U.S. I am glad to see this administration has announced a plan to secure our water systems from cyberattacks, the plan will be implemented in the next few months.
“One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute.” - William Feather
HOW is this stock going up every day/ low rates are nice, but this isn't a tech stock!
Dividend INcrease in about two weeks! Most likely to $.55/.56 per. share. AWK acquiring several new systems already and more to close before years end!
LONG & STRONG 💪 on $AWK —> Thanks for the 9.5% DIVIDEND INCREASE ⬆️ to $0.6025 per quarter.
GNOME ON THE RANGE
It’s all about that Bass! Nice to see another acquisition, this one is Bass Lake Water (Madera County) which serves 1000 customer connections. It appears to be located on the western side of the Sierras and south of the Yosemite Valley area. The BLWC website has their interesting history/story dating back to the 1930’s. The water utility group is getting some positive price action today, good luck & great investing!
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