Is American States Water (AWR) a Solid Growth Stock? 3 Reasons to Think "Yes"

03.02.25 18:45 Uhr

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Growth investors focus on stocks that are seeing above-average financial growth, as this feature helps these securities garner the market's attention and deliver solid returns. However, it isn't easy to find a great growth stock.In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end.However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects, makes it pretty easy to find cutting-edge growth stocks.American States Water (AWR) is on the list of such stocks currently recommended by our proprietary system. In addition to a favorable Growth Score, it carries a top Zacks Rank.Studies have shown that stocks with the best growth features consistently outperform the market. And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy).Here are three of the most important factors that make the stock of this water and electric utility a great growth pick right now.Earnings GrowthArguably nothing is more important than earnings growth, as surging profit levels is what most investors are after. And for growth investors, double-digit earnings growth is definitely preferable, and often an indication of strong prospects (and stock price gains) for the company under consideration.While the historical EPS growth rate for American States Water is 5.8%, investors should actually focus on the projected growth. The company's EPS is expected to grow 10.7% this year, crushing the industry average, which calls for EPS growth of 6.1%.Impressive Asset Utilization RatioGrowth investors often overlook asset utilization ratio, also known as sales-to-total-assets (S/TA) ratio, but it is an important feature of a real growth stock. This metric exhibits how efficiently a firm is utilizing its assets to generate sales.Right now, American States Water has an S/TA ratio of 0.25, which means that the company gets $0.25 in sales for each dollar in assets. Comparing this to the industry average of 0.16, it can be said that the company is more efficient.While the level of efficiency in generating sales matters a lot, so does the sales growth of a company. And American States Water looks attractive from a sales growth perspective as well. The company's sales are expected to grow 7.6% this year versus the industry average of 4.8%.Promising Earnings Estimate RevisionsBeyond the metrics outlined above, investors should consider the trend in earnings estimate revisions. A positive trend is a plus here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.The current-year earnings estimates for American States Water have been revising upward. The Zacks Consensus Estimate for the current year has surged 0.8% over the past month.Bottom LineAmerican States Water has not only earned a Growth Score of B based on a number of factors, including the ones discussed above, but it also carries a Zacks Rank #2 because of the positive earnings estimate revisions.You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.This combination indicates that American States Water is a potential outperformer and a solid choice for growth investors.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.See Stocks Now >>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 American States Water Company (AWR): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks

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06.09.2016American States Water UnderweightBarclays Capital
31.10.2014American States Water HoldBrean Capital
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31.10.2014American States Water HoldBrean Capital
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06.09.2016American States Water UnderweightBarclays Capital

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