Is AWR a good stock to buy? We came across a bullish thesis on American States Water Company on Quality At A Fair Price’s Substack. In this article, we will summarize the bulls’ thesis on AWR. American States Water Company’s share was trading at $76.89 as of June 8th. AWR’s trailing and forward P/E were 22.85 and 21.19 respectively according to Yahoo Finance.
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American States Water Company (AWR) stands out as a high-quality regulated utility with a long track record of stable operations, resilient cash flows, and consistent dividend growth. The company provides regulated water services to approximately 265,000 customer connections across California, electricity services to roughly 25,000 customers in the Big Bear Lake area, and contracted water and wastewater services for multiple U.S. military bases, giving it a diversified and highly defensive business model.
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Its exposure to essential infrastructure and regulated operations creates predictable earnings visibility and supports long-term shareholder returns even during uncertain economic environments. AWR currently offers a forward dividend yield of 2.6%, which is meaningfully above its five-year average yield of 2.11%, suggesting the stock may be undervalued by nearly 20% based on Dividend Yield Theory.
This valuation disconnect creates an attractive entry point for investors seeking both stability and upside potential. The company has also demonstrated impressive dividend consistency, supported by decades of uninterrupted dividend increases and growth rates that continue to outpace inflation. Its dividend profile remains particularly compelling given the dependable nature of regulated utility earnings and the company’s disciplined capital allocation strategy.
Beyond income generation, American States Water Company also offers attractive total return potential. With estimated earnings growth of more than 7% and additional upside from valuation normalization, the company is positioned to deliver forward annualized returns approaching 14%. Combined with its defensive characteristics, strong balance sheet, and predictable cash generation, AWR represents a compelling long-term investment opportunity for dividend growth and conservative equity investors alike.
Previously, we covered a bullish thesis on American Water Works Company, Inc. by Max Dividends in October 2024, which highlighted the company’s consistent dividend growth, resilient regulated utility operations, and strong financial performance. AWK’s stock price has depreciated by approximately 44.14% since our coverage. Quality At A Fair Price shares a similar view but emphasizes American States Water Company’s undervaluation and stronger forward return potential.
American States Water Company is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held AWR at the end of the first quarter which was 26 in the previous quarter. While we acknowledge the risk and potential of AWR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AWR and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
