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The utilities sector is made up of companies that provide electricity, natural gas, water, sewage and other services to homes and businesses. Many of these companies are heavily regulated, and include Duke Energy Corp. (DUK), Southern Co. (SO), and American Electric Power Co. Inc. (AEC). Utilities stocks, as represented by the Utilities Select Sector SPDR ETF (XLU), have underperformed the broader market, with a total return of -6.0% compared to the S&P 500’s total return of 5.7% over the past 12 months. These market performance numbers and the statistics in the tables below are as of June 25.
Here are the top 3 utilities stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Utilities Stocks
These are the utilities stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
- NRG Energy Inc.: NRG Energy is an integrated power company that produces, sells, and distributes energy and energy services. The company provides energy production and cogeneration facilities, thermal energy production, and energy resource facilities. On May 7, NRG reported a 7% decline in revenue and a 75% decline in net income for Q1 2020, which ended March 31, 2020. The company said that there has been a reduction in load across its markets due to COVID-19, and that uncertainty about demand will continue until the economy recovers.
- PPL Corp.: PPL is an energy and utility holding company that, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. On May 8, the company announced its Q1 2020 earnings, posting a 7.5% gain in net income per share even though non-GAAP earnings from operations declined about 4%.
- Exelon Corp.: Exelon is a utility services holding company that, through its subsidiaries, engages in the generation and distribution of energy in both the United States and Canada. Its energy operations are diversified across various sources, including fossil fuels, hydroelectric power, nuclear power, and renewables.
Fastest Growing Utilities Stocks
These are the utilities stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
- Pinnacle West Capital Corp.: Pinnacle West Capital is a utility holding company that, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. On June 23, the company said that it does not expect the COVID-19 pandemic to result in any disruptions to their customers’ power supply as it implements numerous steps to protect employees and maintain service. These include adding additional layers of backup personnel to help prevent potential service disruptions, and implementing new sanitation and hygiene practices. The company also said it’s providing various concessions to customers who may be unable to pay their energy bills.
- Sempra Energy: Sempra is an energy services holding company that, through its subsidiaries, generates electricity, delivers natural gas, operates natural gas pipelines and storage facilities, and operates a wind power generation project. The company announced on June 24 that it had completed the $2.2 billion divestiture of its Chilean assets, which were sold to the Chinese investment holding company, State Grid International Development. This is part of a broader effort to sell its South American assets, and Sempra thus far has raised approximately $5.82 billion, including the sale of its Chilean holdings.
- Alliant Energy Corp.: Alliant Energy is a public-utility services company that supplies electricity, natural gas, and water to residential and commercial customers. The company serves customers in Illinois, Iowa, Minnesota, and Wisconsin. On May 26, the company announced plans to expand its solar energy infrastructure in Wisconsin, which ultimately would provide power to 175,000 homes per year.
Utilities Stocks with the Most Momentum
These are the utilities stocks that had the highest total return over the last 12 months.
- NextEra Energy Inc.: NextEra is an electric power and energy infrastructure company that generates electricity through wind, solar, and natural gas. Through its subsidiaries, the company also operates multiple commercial nuclear power units. CEO Jim Robo has said that the company’s strong underlying businesses, along with about $12 billion in liquidity, should enable NextEra to deliver adjusted EPS near the “top end” of the company’s expectations for the next 3 years.
- Eversource Energy: Eversource Energy is a utility holding company that engages in the generation, transmission, and distribution of natural gas and electricity. The company earlier this year agreed to acquire the Massachusetts natural gas assets of Columbia Gas for $1.1 billion from NiSource Inc. (NI).
- Dominion Energy Inc.: Dominion Energy is a producer and transporter of energy products. The company provides natural gas and electric energy transmission, gathering, and storage solutions. On June 18, the company announced several measures designed to help customers who are experiencing difficulty making their payments, due in part to the economic disruptions caused by COVID-19.