There are plenty of advantages to taking a long-term view of companies and investments. You save on trading costs and taxes, you can really drill down and understand a company, and you don't have to worry about digging up yet another market-beater (which really isn't that common). But perhaps best of all, you can look at occasionally confusing quarterly numbers and just shrug them off.

In the case of California-based American States Water (NYSE:AWR), this water services company reported that sales rose 9% in the fourth quarter while earnings per share nearly doubled. That last part is where the numbers get a little trickier. See, the company recognized a $5.4 million reduction in a supply cost balancing account and a $2 million unrealized loss on purchased power contracts.

Supply cost balancing? Unrealized losses? Huh?

Not to worry. The supply cost balancing account is a way of accounting for the recovery of supply costs incurred in one period but recovered in another. In this case, the company is catching up with old costs from prior years and earlier in 2005. So while that would seem to inflate this quarter's earnings, investors who take a longer-term perspective will see that these supply cost balance amounts more or less even out over the course of years (presuming no major changes or problems in the policies of the regulators).

This is definitely the sort of company that requires a long-term outlook. We're not talking about Google here; we're talking about a company in a heavily regulated industry. On the other hand, it provides an essential service, and investments made in the capital base typically are allowed to produce solidly profitable returns for years (and in some cases, decades) to come.

I'm still a fan of water from an investment perspective. While I don't foresee American States growing aggressively through acquisition, I do believe management will be sound stewards of shareholder capital and will produce good total returns on that capital. Better still, the stock seems a bit more of a bargain than the likes of Aqua America (NYSE:WTR), Suez (NYSE:SZE), or Motley Fool Income Investor pick California Water (NYSE:CWT). Aqua America is probably my top personal pick, but American States offers a better yield at a lower valuation, and that's more than just water under the bridge.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).