I'm not sure what's more surprising - the fact that many water utility stocks have started to outgain the market, or that these water utility stocks fully deserve to outgain the market. It's true either way... the likes of Artesian Resources Corp. (ARTNA), Southwest Water Co. (SWWC), and California Water Service Group (CWT) have been one of the very few groups to dole out any gains over the last couple of weeks.

So what gives? I think it's a combination of a flight to safety and a flight to quality.

In the interest of fairness, not all water utility stocks look all that healthy. Moreover, I find the chart of the S&P 1500 Water Utility Index to be just as compelling as the underlying fundamental results for these companies. Let's look at both.

First up, a fundamental snapshot for the major players in the water utility industry.

I already mentioned Artesian Resources Corp. Southwest Water Co., and California Water Service Group. We also need to add American States Water Company (AWR), American Water Works (AWK), Aqua America (WTR), SJW Corp. (SJW), Middlesex water (MSEX), and York Water (YORW) to the list. A couple of other names also appear on our analysis grid.

Now, don't get the wrong idea here. None of these picks are 'sexy' by anybody's standards. Several of them are rising pretty quickly though, and I think capital gains are sexy in their own special way.

That said, it's a little stunning how rapidly some of these stocks can rise and fall, considering they're commodity-like qualities.

The yellow highlights were items I found particularly interesting.


Chart-wise, Artesian Resources Corp. American States Water Company, and California Water Service Group were chosen as your best foreseeable bets (though ARTNA looks a little overbought). Fundamentally speaking though, American Water Works (AWK) and Southwest Water Co. (SWWC) look like they're the most sound. American States' chart looks really troubled, but Southwest's chart may be on the verge of an upside explosion.... toying with a move above its 200 day moving average line. 

As for an industry-based chart, the momentum we've seen since mid-May has quietly pushed this group to very near the head of the class. I think more recovery is on the way.


For this index chart, I'm setting a mental target of 745, which is about 20% from where we are now. If you pick the right water utility stock(s), you should be able to do even better.

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