American Water Works Company AWK announced that its unit, Pennsylvania American Water has entered into an agreement to acquire the wastewater assets of Delaware Sewer Company in Delaware Township, Pike County. This acquisition will cost $61,700 and add nearly 40 wastewater customers to its existing customer base.Pennsylvania American Water, through its existing distribution network, serves nearly 2.4 million people in Pennsylvania. The said acquisition might seem relatively small compared to its existing customer base but additions like this help render quality services to customers at a reasonable cost.The wastewater system of Delaware Sewer Company suffered from a lack of investment and proper maintenance. The primary reason behind the acquisition is that Pennsylvania American Water will take steps to improve the existing infrastructure, once the acquisition is complete by the third quarter of 2019, subject to regulatory approvals.Consolidation is EssentialA recent study from Utah State University showed that overall water main break over the last 6-year period has gone up 27% in the United States and Canada. The primary reasons behind water main failure are the aging water infrastructure and higher failure rates of smaller water utilities compared with larger ones.Since the existing water infrastructure in the United States is aging, proper maintenance and upgradation of the system will require investment of billions of dollars, which becomes difficult for small water utilities to make arrangement for.Therefore, through the acquisition of small utilities, it becomes easier for large companies to make arrangement for funds to carry out these major overhauls. American Water Works is one of the most active players and continues to widen its market reach through acquisitions. In the first half of 2018, the company added 5,600 new customers through completed acquisitions. The pending acquisition agreement, when complete, will add nearly 57,000 customer connection to its existing customer base.American Water Works in not the only water utility that is actively pursuing an inorganic growth strategy. We can also notice other active water utilities like Global Water Resources, Inc. GWRS and Aqua America WTR to pursue acquisitions.Zacks Rank and A Key Pick Currently, American Water Works has a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is Middlesex Water Company MSEX, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Middlesex Water Company delivered an average positive earnings surprise of 6.83% in the trailing four quarters. Earnings estimates of the company have moved up 17.9% to $1.84 in the past 30 days.Shares of both American Water Works and Middlesex Water Company have outperformed the industry in a year’s time. Today's Stocks from Zacks' Hottest StrategiesIt's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.See Them Free>>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 Aqua America, Inc. (WTR): Free Stock Analysis Report Middlesex Water Company (MSEX): Free Stock Analysis Report American Water Works (AWK): Free Stock Analysis Report Global Water Resources, Inc. (GWRS): Free Stock Analysis Report To read this article on Zacks.com click here.