Michael Marberry, a director at
American Water Works (AWK), recently bought 1,420 shares. The buy increased his holdings by 62 percent, and came to a total cost of $202,137.
The director was the last buyer with a 3,786 share buy back in November, costing just under $493,000. Another company director bought just under $8,000 in shares last August. The last insider sale occurred in mid-2022.
Overall, American Water Works insiders own 0.2 percent of shares.
The water utility has seen shares drop 20 percent over the past year, as rising interest rates have weighed on valuation.
Revenues and earnings both rose by about 8 percent in the past year, and AWK sports a 22 percent profit margin.
The recent drop in shares has taken American Water Works to about 24 times earnings instead of a historical average in the high-20s to low-30s.
Plus, shares pay a 2.3 percent dividend yield, which the company has a history of raising over time.
Action to take: Investors may like shares here, as they can likely see low double-digit gains this year as interest rates start to come down, likely in the latter half of the year.
Declining interest rates should be beneficial for utility stocks in general.
For traders, shares have been trending higher since October, but have pulled back in recent weeks.
There could be a short-term gain ahead. The March $130 calls, last going for about $2.15, could see mid-double-digit returns in the coming weeks.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.