In this article, we will discuss the 10 Best Performing Utilities Stocks So Far in 2025.
The utility investors have had a strong 2024. Morningstar reported that utilities rose by 27%, including dividends, marking its best performance since 2000. The 2024 rally mitigated the 2023 woes, resulting in the fair valuation of utilities. Notably, the valuations fully showcase the AI-related energy demand growth potential. Even though utilities have outperformed the market in 2 of the last 3 years, the sector’s 7% average return since 2021 remains in line with the sector’s 40-year average.
Growth Drivers for Utilities in 2025
As per Fidelity, America is at an inflection in power demand, with a favourable outlook for utilities. The electrification and the growth of AI continue to act as tailwinds for exponential growth in the sector. The technology of AI has been acting as a significant boost to predicted energy demand over the upcoming decade. AI needs significant computational power, storage space, and low-latency networking for training and running models. Such applications are generally hosted in data centers. With AI becoming more common, the energy demands from data centers are expected to grow exponentially, which can translate to increased earnings growth for utilities.
As a result of such trends, the energy demand is expected to grow more than 38% over the upcoming 2 decades, believes Fidelity. Regulated utilities are required to build new power plants in a bid to satisfy this demand surge. With reserve margins tightening, power prices for existing energy are also expected to increase. Therefore, the investment firm believes that the transition of power fleet to electrification and the growth of AI are durable trends, which are expected to support utilities for years to come.
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Investing in Utilities
Morningstar believes that income-focused investors have favored utilities because of their stable cash flows and high dividend payout ratios. The firm believes that utilities are a defensive play for investors during economic downturns, providing steady returns even during the volatile market. Furthermore, utilities’ focus on sustainable energy investments and grid modernization results in creating opportunities for long-term growth, further strengthening their appeal as income-generating assets.
Utility companies that effectively steer through regulatory landscapes, make investments in infrastructure, and embrace innovation are expected to sustain their competitive advantages. Numerous factors are expected to drive renewed growth in electricity demand, including the proliferation of EVs, and the surge of data centers driven by advancements in AI. As per Morningstar, such factors reflect strong opportunities for utilities to expand services and infrastructure to cater to dynamic electricity needs.
With this in mind, let us look at the 10 Best Performing Utilities Stocks So Far in 2025.
A row of utility poles and power lines, showing the reach of the electric utility operations.
Our Methodology
To list the 10 Best Performing Utilities Stocks So Far in 2025, we used a screener to shortlist the stocks catering to the utility sector. Next, we chose the stocks that have increased the most on a YTD basis. Finally, the stocks were ranked in ascending order of their YTD performance, as of February 19. We also mentioned hedge fund sentiments around each stock, as of Q4 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Performing Utilities Stocks So Far in 2025
10) Vistra Corp. (NYSE:VST)
% Gain on a YTD Basis: 13.1%
Number of Hedge Fund Holders: 120
Vistra Corp. (NYSE:VST) operates as an integrated retail electricity and power generation company. Evercore ISI resumed coverage of the company’s stock with an “Outperform” rating and a price target of $202. The firm expects Vistra Corp. (NYSE:VST) to build on its 2024 momentum, with expected EBITDA and cash flow upside fueled by increased power curves and a possible large customer load power supply contract. Elsewhere, BMO Capital upped the company’s price target to $191 from $151, keeping an “Outperform” rating.
Vistra Corp. (NYSE:VST)’s integrated model, combining retail and generation with strong commercial acumen, has been delivering results for many stakeholders. Furthermore, the company continues to make progress on its plans to develop up to 2,000 MW of gas-fueled generation capacity. Vistra Corp. (NYSE:VST) has been growing its fleet of zero-carbon resources, advancing its interests via cost-effective and strategic investments.
Overall, Vistra Corp. (NYSE:VST) remains well-placed to reap the benefits from the growth of the broader utility sector because of its focus on a diverse power generation fleet, exposure to retail electricity markets, and expansion into storage and renewables. Meridian Funds, managed by ArrowMark Partners, released its Q3 2024 investor letter. Here is what the fund said:
“Vistra Corp. (NYSE:VST) is an integrated retail electricity and power generation company, primarily serving Texas and the Midwest. We own Vistra because we expect power markets to continue tightening as baseload supply declines, coupled with rising demand from data centers, electric vehicles, and manufacturing reshoring. These factors create a favorable pricing environment for Vistra’s generation fleet, especially its nuclear and gas assets. The stock performed well during the period for three key reasons: tightening energy markets and strengthened pricing in forward-year energy contracts, the continuation of Vistra’s aggressive share repurchase program, and the company’s announced plan to acquire the remaining interest in Vistra Vision at an attractive valuation. Additionally, the company reaffirmed its 2024 guidance, indicating that results are trending toward the upper end of the previously projected range. We took advantage of the stock’s strength this quarter to trim our position.”
9) UGI Corporation (NYSE:UGI)
% Gain on a YTD Basis: 15.4%
Number of Hedge Fund Holders: 27
UGI Corporation (NYSE:UGI) is engaged in the distribution, storage, transportation, and marketing of energy products and related services. Jefferies has a positive outlook on the company’s stock and has expressed confidence in the company’s turnaround strategy. The plan consists of initiatives like bolstering of AmeriGas division, divestment of international assets, and realizing potential upside in gas marketing. UGI Corporation (NYSE:UGI)’s efforts, together with positive market conditions, are expected to fuel performance over the near term.
UGI Corporation (NYSE:UGI) highlighted that disciplined execution within its natural gas and international propane businesses together with a renewed focus on the operational performance at AmeriGas resulted in a 14% growth in Q1 2025 in adjusted diluted EPS over the prior year. The company’s natural gas businesses were aided by robust gas demand and elevated levels of gas rates at the West Virginia gas utility.
UGI Corporation (NYSE:UGI) remains focused on driving operational improvements, mainly at AmeriGas Propane, where it has been emphasizing enhancing business processes, commercial practices, and service quality. Such operational improvements together with disciplined capital allocation, strategic portfolio optimization, and robust balance sheet management will place UGI Corporation (NYSE:UGI) well to deliver consistent growth.
8) Talen Energy Corporation (NASDAQ:TLN)
% Gain on a YTD Basis: 17%
Number of Hedge Fund Holders: 77
Talen Energy Corporation (NASDAQ:TLN) is an independent power producer and infrastructure company, that produces and sells electricity, capacity, and ancillary services into wholesale power markets. BofA initiated coverage of the company’s stock, providing a “Buy” rating and a price target of $253. The firm is optimistic about the lucrative AWS data center contract for the Susquehanna nuclear plant, newly proposed RMR rates, and the anticipations of increased power prices.
Elsewhere, JPMorgan analyst Jeremy Tonet upped the price target for Talen Energy Corporation (NASDAQ:TLN)’s stock to $295 from $288, maintaining an “Overweight” rating. The analyst highlighted the RMR settlement for the Brandon Shores and H.A. Wagner plants, allowing the company to operate until May 31, 2029. The settlement will provide fixed payments to Talen Energy Corporation (NASDAQ:TLN) at $312/MW-day ($145 million annually) and $137/MW-day ($35 million annually) to operate Brandon Shores and H.A. Wagner, respectively.
ClearBridge Investments, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“We added several new positions during the quarter and updated our utilities and energy exposure. In utilities, we bought Talen Energy Corporation (NASDAQ:TLN), an independent power producer which sells electricity, capacity, and ancillary services into wholesale power markets, which we funded by exiting our position in Constellation Energy. Although both companies are merchant power producers that stand to benefit from higher power prices as AI data centers are brought online, we believe that Talen’s stock price has milder embedded expectations than does the more optimistic Constellation. As a result, we believe that Talen represents a much more attractive risk/reward tradeoff that still capitalizes on the strong, long-term trend toward higher power prices.”
7) Aris Water Solutions, Inc. (NYSE:ARIS)
% Gain on a YTD Basis: 17.4%
Number of Hedge Fund Holders: 31
Aris Water Solutions, Inc. (NYSE:ARIS) is an environmental infrastructure and solutions company, which provides water handling and recycling solutions. The investors continue to demonstrate increasing enthusiasm for Aris Water Solutions, Inc. (NYSE:ARIS) as it has been capitalizing on the broader industry trends and expanding its market presence. The company had a strong Q3 2024 as it has been growing its produced water volumes, increased its recycled water sales, and maintained strong margins. The company continues to see steady volume growth and higher cash generation.
Aris Water Solutions, Inc. (NYSE:ARIS) was able to see a 2% increase in produced water volumes on a sequential basis and 6% on a YoY basis. The company continues to evaluate commercial opportunities for mineral extraction from its produced water stream. Furthermore, it continues to progress other strategic initiatives to further lower its cost structure, deepen its relationships with existing customers, and further diversify the customer base. Based on customers’ projected activity, Aris Water Solutions, Inc. (NYSE:ARIS) anticipates that its growth will continue through year-end on its dedicated acreage.
With the overall growth and modernization in the utility sector, Aris Water Solutions, Inc. (NYSE:ARIS) remains well-placed to benefit from higher demand for sustainable water management, infrastructure investment, and regulatory compliance needs.
6) Companhia de Saneamento Básico do Estado de São Paulo – SABESP (NYSE:SBS)
% Gain on a YTD Basis: 19.5%
Number of Hedge Fund Holders: 18
Companhia de Saneamento Básico do Estado de São Paulo – SABESP (NYSE:SBS) offers basic and environmental sanitation services in the São Paulo State, Brazil. Bank of America Securities analyst Gustavo Faria reiterated a “Buy” rating on the company’s stock, setting a price target of $23.20. As per the analyst, the regulation change about tariff adjustments is expected to positively impact the company’s NPV.
Furthermore, the concerns about revenue gaps because of discounts provided to large clients are deemed manageable, says Faria. Despite these discounts contributing to the revenue gap, the potential impact is anticipated to be minimized via regulatory recognition of part of these discounts and Companhia de Saneamento Básico do Estado de São Paulo – SABESP (NYSE:SBS)’s initiatives to close the gap. The company’s strong earnings growth and attractive valuation metrics support a “Buy” rating.
Companhia de Saneamento Básico do Estado de São Paulo – SABESP (NYSE:SBS) plans to double its asset base until 2029. Furthermore, the company’s new compensation model will be aligned with the universalization of water and sewage services goals set by the concession agreement. Overall, the company remains well-placed to benefit from the utility sector growth mainly through privatization opportunities, infrastructure investments regulatory reforms, and urban growth.
5) NRG Energy, Inc. (NYSE:NRG)
% Gain on a YTD Basis: 21.2%
Number of Hedge Fund Holders: 53
NRG Energy, Inc. (NYSE:NRG) operates as an energy and home services company in the United States and Canada. Evercore ISI analyst Durgesh Chopra upped the company’s stock to “Outperform” from “In Line,” providing a price target of $126, up from $74. The firm has a positive outlook for the power and utilities group, highlighting improving fundamentals and a favorable valuation backdrop. The firm believes that these factors are expected to support outperformance through H1 2025.
As per the analyst, factors such as inflation moderating, expected interest rate cuts, and higher electricity demand are expected to act as growth enablers. Evercore expects elevated investment in utility infrastructure, mainly fueled by data centers, with more deals and announcements anticipated in 2025. Elsewhere, Guggenheim analyst Shahriar Pourreza raised NRG Energy, Inc. (NYSE:NRG)’s price target to $134 from $118, keeping a “Buy” rating.
For 2025, the company expects adjusted EBITDA in the range of $3,725 million – $3,975 million and adjusted net income of between $1,235 million – $1,385 million. NRG Energy, Inc. (NYSE:NRG) remains focused on adding new capacity to its portfolio, and its partnership with Renew Home offers further validation of its customer-focused strategy. NRG Energy, Inc. (NYSE:NRG) has provided 2024 ranges for adjusted net income and adjusted EPS of $1,235 – $1,385 and $5.95 – $6.75, respectively.
4) Suburban Propane Partners, L.P. (NYSE:SPH)
% Gain on a YTD Basis: 24.9%
Number of Hedge Fund Holders: 1
Suburban Propane Partners, L.P. (NYSE:SPH) is engaged in the retail marketing and distribution of propane, renewable propane, fuel oil, and refined fuels in the US. Propane volumes in Q1 2025 were aided by higher demand in the company’s Southeast operations for backup power generation and other applications in the aftermath of Hurricanes Helene and Milton, and from growth in Suburban Propane Partners, L.P. (NYSE:SPH)’s customer base resulting from the completion of a strategic propane acquisition during November, which expanded its service territories in the Southwest.
The company expects plenty of heating season moving forward and, considering more seasonable weather in the early part of the fiscal Q2, Suburban Propane Partners, L.P. (NYSE:SPH) is well-placed to serve the elevated demand. Regarding the capital projects to construct an anaerobic digester system in upstate New York and gas upgrade equipment at its anaerobic digester facility in Columbus, Ohio, Suburban Propane Partners, L.P. (NYSE:SPH) continues to advance the construction activities, which are anticipated to be completed towards the end of calendar 2025.
The propane sector witnessed increased wholesale prices, but the company’s strategic investments in renewable energy and acquisitions supported offsetting some challenges. Furthermore, as utilities expand renewable energy generation, grid reliability challenges tend to increase. This can fuel demand for propane-powered backup generators and distributed energy solutions which Suburban Propane Partners, L.P. (NYSE:SPH) supplies.
3) Constellation Energy Corporation (NASDAQ:CEG)
% Gain on a YTD Basis: 32.5%
Number of Hedge Fund Holders: 85
Constellation Energy Corporation (NASDAQ:CEG) generates and sells electricity in the US. The company was awarded over $1 billion in combined contracts by the U.S. General Services Administration (GSA) to supply power to over 13 government agencies and perform energy savings and conservation measures at five GSA-owned facilities in the National Capital Region. Constellation Energy Corporation (NASDAQ:CEG)’s retail subsidiaries will provide the services to the GSA.
The energy sector continues to witness a significant shift towards clean and renewable sources, aided by global efforts to combat climate change and the higher demand for sustainable power solutions. Constellation Energy Corporation (NASDAQ:CEG)’s emphasis on carbon-free generation aligns well with this trend, mainly as industries such as AI and data centers need constant power supply. The strong interest in round-the-clock renewable power, highlighted by the Microsoft deal, reflects a new market segment for energy providers.
The electrification of industries (such as AI data centers, EVs, and industrial decarbonization) continues to fuel increased electricity demand. Fred Alger Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Constellation Energy Corporation (NASDAQ:CEG) is the largest producer of clean energy in the U.S., with 32,400 Megawatts of capacity, approximately 67% of which is nuclear generated. Its nuclear, hydro, wind, and solar facilities provide 10% of all clean energy on the U.S. grid and 22% of its clean baseload power. We believe the company stands to benefit from the increasing electrification of the U.S. economy. The rise of electric vehicles, data centers, and reshoring of American manufacturing is driving U.S. electricity load growth for the first time in nearly two decades. During the quarter, shares detracted from performance due to a combination of regulatory challenges and broader industry pressures. The Federal Energy Regulatory Commission (FERC) rejected an interconnection agreement between Talen Energy’s Susquehanna nuclear plant and an Amazon data center, raising concerns about similar deals and regulatory hurdles for the nuclear industry. While this event was outside Constellation’s control, we believe it does not alter the thesis that tight power markets should drive higher pricing for the company. In our view, the FERC rejection also underscores anticipated tightness in mid-Atlantic power markets, reinforcing the long-term value of Constellation’s under-monetized assets.”
2) SolarBank Corporation (NASDAQ:SUUN)
% Gain on a YTD Basis: 80.6%
Number of Hedge Fund Holders: 1
SolarBank Corporation (NASDAQ:SUUN) operates as an independent renewable and clean energy project developer, power producer, and asset operator in Canada and the US. The company announced its fiscal Q2 and fiscal 2025 interim financial results. The seasonal and political factors impacted revenues, however, this was offset by significant increases in the gross profit due to the favorable sales mix that it experienced, as expected, with the growth in SolarBank Corporation (NASDAQ:SUUN)’s independent power producer assets and corresponding revenues.
This happens to be a stable recurring revenue that is under long-term contracts, and the company plans to continue to grow this business as evidenced by the C$25.8 million Royal Bank of Canada debt facility supporting the construction of the BESS projects. SolarBank Corporation (NASDAQ:SUUN) has announced a $49.5 million transaction with Qcells for the sale and subsequent construction of 4 solar projects in New York State. The projects will use high-quality Qcells modules that will be manufactured in the USA. Approximately $2.8 billion is being invested by Qcells to bolster the US domestic solar manufacturing and innovation to support and accelerate the US clean energy transition.
Utilities have been integrating solar energy into their generation mix in a bid to meet clean energy mandates and carbon neutrality targets. SolarBank Corporation (NASDAQ:SUUN) is expected to benefit from new utility-scale solar farm contracts.
1) Oklo Inc. (NYSE:OKLO)
% Gain on a YTD Basis: 106.5%
Number of Hedge Fund Holders: 27
Oklo Inc. (NYSE:OKLO) is engaged in designing and developing fission power plants to offer reliable and commercial-scale energy to customers in the US. Wedbush analyst Daniel Ives raised the company’s price target to $45 from $26, keeping an “Outperform” rating on the shares due to the increase in confidence in the AI Revolution data center buildout under the Trump Administration. Wedbush believes that Project Stargate is the beginning of a much bigger AI initiative within the Beltway, and nuclear energy is playing a critical role in powering data centers at the foundation of the 4th Industrial Revolution. Notably, Oklo Inc. (NYSE:OKLO) is well-placed to be a leading player.
Elsewhere, Citi upped the company’s price target to $31 from $10, keeping a “Neutral” rating. As per the firm, the utility-scale companies remain well-placed with achievable consensus estimates and stronger balance sheets. Oklo Inc. (NYSE:OKLO)’s innovative business model of building, owning, and operating its reactors while, at the same time, selling power directly to customers under long-term contracts places it well for stable and recurring revenue streams. This approach makes Oklo Inc. (NYSE:OKLO) stand apart from traditional nuclear power companies and aligns with the requirements of modern energy consumers, primarily in the data center and industrial sectors.
While we acknowledge the potential of OKLO as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than OKLO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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