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The utilities sector isn't exactly known for exciting investors. These companies aren't going to see their shares shoot up in a heartbeat, like some names in the high-flying technology sector. Nor are they household names that consumers know and love.
But the sector is, of course, instrumental in our daily lives. As such, these stocks are typically referred to as "defensive" since they provide consistent earnings no matter the broader economic backdrop.
Not all utilities are created equal, however, and as the world transitions to renewable energy sources, some electric utilities may be at risk. Water, on the other hand, isn't going anywhere, meaning water utility companies offer an attractive long-term bet for investors. And within the space one name stands out: American Water Works.
This point is not lost on the Street: shares of the company have gained 25% this year through Monday's close, while the S&P 500 utilities group is flat. With a market cap north of $27.9 billion, the company is by far the largest player focused exclusively on water, in what's a heavily fragmented market undergoing consolidation.
"American Water Works is totally unique," said Tim Porter, chief investment officer at Reaves Asset Management. "No other water utility is growing as quickly. No other water utility is a pure-play water utility. No one has their credentials as far as ESG or their performance track record."