10 High Growth Utility Stocks To Invest In

8. Southwest Gas (NYSE:SWX)  

5-Year Revenue CAGR: 12.05%  

No of Hedge Fund Investors: 15  

Southwest Gas (NYSE:SWX) is a U.S.-based utility company that provides natural gas services to over 2.2 million customers in Arizona, Nevada, and California. The company is also involved in pipeline construction and maintenance through its subsidiary, Centuri Group.

Southwest Gas’ (NYSE:SWX) strong growth profile is driven by its presence in Arizona and Nevada, two of the fastest-growing states in the US. According to the latest Investor’s Presentation, the company’s service territory has experienced robust population growth, with Arizona’s 5-Year Real GDP CAGR (2018-2023) 70% higher than the national average, and Nevada generating Real GDP growth 30% higher than the national average. This growth has translated into a high customer growth rate, with Southwest Gas (NYSE:SWX) adding 40,000 new customers annually, representing 6% of all new natural gas customers across the US.

This strong growth profile is a significant advantage for the company and provides a solid foundation for future earnings growth. Moreover, forward markets for Henry Hub futures, the benchmark U.S. natural gas price, indicate that gas prices will average $3.20 per mmBtu in 2025, compared to an average of $2.22 so far this year, data from LSEG shows. If realized, that would be a roughly 44% year-on-year price increase. Southwest Gas (NYSE:SWX) is well-positioned to benefit from the increase in gas prices. The company’s earnings are projected to increase by 9% in the current year. Industry analysts have reached a consensus on the stock’s Buy rating, with an average target price of $77.00 that suggests a 3.52% upside potential from its current levels.