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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 American Electric Power Co. Inc. (AEP), Consolidated Edison Inc. (ED), and Xcel Energy Inc. (XEL). Utilities stocks, as represented by the Utilities Select Sector SPDR ETF (XLU), have outperformed the broader market, providing investors with a total return of 21.8% compared to the S&P 500’s total return of 16.7% over the past 12 months. These market performance numbers and the statistics in the tables below are as of February 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.
- PPL Corp.: PPL is an energy and utility holding company that, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. The company reported growth in adjusted earnings per share (EPS) of 9.6% year-over-year (YOY) for Q4 2019. Revenue grew 0.8% YOY compared to the same quarter a year ago.
- Southern Co.: Southern is a public utility holding company that, through its subsidiaries, generates electricity and sells it at the wholesale and retail level. The company also offers wireless telecommunications services, two-way radio, telephone, paging, and internet access services, and offers wholesale fiber optic solutions. Southern posted YOY adjusted EPS growth of 8.0% for Q4 2019. However, revenue for the quarter fell by 7.9%.
Fastest Growing Utilities Stocks
These are the utilities stocks with the highest YOY 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.
- Exelon Corp.: Exelon is a utility services holding company that, through its subsidiaries, engages in the generation and distribution of energy. The company announced in early December changes to some of its core executive leadership team and that of its subsidiary Baltimore Gas and Electric.
- 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.
- 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. The company posted YOY EPS growth of 147.8% for Q4 2019. However, revenue fell 11.4% compared to the same three-month period a year earlier.
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.
- Entergy Corp.: Entergy is an integrated energy company engaged in electric power production and retail electric distribution operations.
- Southern Co.: See above for company description.
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