In this article, we will discuss the 10 Worst Performing Utilities Stocks to Buy According to Analysts.

As 2025 kicks off, the global energy sector continues to face a volatile and fast-moving landscape, says James Forrest (Group Industry Leader for Energy Transition and Utilities at Capgemini). The pressures due to higher electricity demands, shifts in geopolitical conditions, and digital advancements converge to reassess the way energy is produced, managed, and consumed. The global increase in electricity demand continues, courtesy of the electrification of transport, industrial transformation, and the strong growth of digital infrastructure, such as AI and data centers. To address this, utilities and grid operators have been embracing modernization and demand-response tactics.

Utility CapEx to Increase, Says Fitch Ratings

Fitch Ratings’ neutral outlook demonstrates moderation in inflationary conditions and a subdued commodity environment. Furthermore, a resurgence of growth in sales, mainly among commercial and industrial customers, cost control, and the tax subsidies and transferability provision of the Inflation Reduction Act can be beneficial for the broader sector. The rating agency believes that utility capex is expected to grow at a double-digit rate, fueled by the investments to make the electric infrastructure more resilient to withstand extreme weather events, accommodate renewable generation, and cater to the needs of the expected surge in power demand from data centers.

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.

Power Demand Needs Utility Investment, Opines Goldman Sachs

With data centers contributing to an increasing need for power, the electric grid will need a significant investment. Goldman Sachs Research projects that ~$720 billion of grid spending through 2030 might be the requirement. Such transmission projects might take several years to permit, and then even more to build, resulting in another bottleneck for data center growth in case the regions are not proactive about this considering the lead time, says James Schneider, a senior equity research analyst at Goldman Sachs. The firm expects global power demand from data centers to increase by 50% by 2027 and by 165% by the decade’s end (as compared to 2023).

Economic Times mentioned that the US electric utilities continue to add billions of dollars to spending plans so that they can build new power supplies and bolster the grid as data centers for AI and cloud computing have been fueling energy demand.

Amidst these investing trends, let us now have a look at the 10 Worst Performing Utilities Stocks to Buy According to Analysts.

Our Methodology

To list the 10 Worst Performing Utilities Stocks to Buy According to Analysts, we used a screener and shortlisted the companies catering to the utilities sector that have performed the worst over the past year, as of February 19. Next, we chose the ones that analysts see significant upside to. Finally, the stocks were arranged in ascending order of their average upside potential, 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 Worst Performing Utilities Stocks to Buy According to Analysts

10) Middlesex Water Company (NASDAQ:MSEX)

% Decline Over Past Year: ~8.3%

Average Upside Potential: ~20.2%

Number of Hedge Fund Holders: 11

Middlesex Water Company (NASDAQ:MSEX) owns and operates regulated water utility and wastewater systems. The company’s revenues for Q3 2024 rose $8.4 million to $55.1 million as compared to the same period in 2023. Middlesex System revenues rose by $6.1 million mainly because of the New Jersey Board of Public Utilities (NJBPU)-approved base rate increase effective March 1, 2024, and higher customer demand. Notably, The Middlesex System in New Jersey offers water services to retail customers, mainly in eastern Middlesex County, New Jersey.

Coming to the rate activity, in October 2024, Middlesex Water Company (NASDAQ:MSEX) filed a 2^nd Distribution System Improvement Charge (DSIC) rate application which is expected to result in $1.1 million of annual revenues. Additionally, in October 2024, the company filed a petition with the NJBPU seeking approval to set a Purchased Water Adjustment Clause tariff rate in order to recover additional costs of $0.6 million related to the purchase of treated water from a non-affiliated water utility regulated by the NJBPU.

Overall, the expansion of the broader utility sector, together with population growth, investments in infrastructure, rate increases, and sustainability initiatives, is expected to fuel Middlesex Water Company (NASDAQ:MSEX)’s future growth.

9) The York Water Company (NASDAQ:YORW)

% Decline Over Past Year: ~8.4%

Average Upside Potential: ~25.2%

Number of Hedge Fund Holders: 8

The York Water Company (NASDAQ:YORW) impounds, purifies, and distributes drinking water. The company has completed the Lake Williams Dam Rehabilitation project on time and within budget. This project formed part of The York Water Company (NASDAQ:YORW)’s broader strategy to invest in infrastructure and ensure the provisioning of safe and reliable water services. In Q3 2024, the company saw operating revenues of $19,715,000, reflecting an increase of $948,000, mainly aided by the revenues from the Distribution System Improvement charge (DSIC) and growth in the customer base.

To provide some context, The DSIC is a Pennsylvania Public Utility Commission-allowed charge that water utilities collect from customers, and is associated with the replacement of aging infrastructure. During the first nine months of 2024, The York Water Company (NASDAQ:YORW) invested $33 million in capital projects for armoring and to replace the spillway of the Lake Williams dam, wastewater treatment plant construction, and various replacements and improvements to infrastructure and routine items. Therefore, The York Water Company (NASDAQ:YORW)’s strong emphasis on sustainable practices, infrastructure upgrades, and strategic expansions can help maintain its resiliency moving forward.

With more housing developments and commercial properties, there will be increased demand for clean water and wastewater services, fueling The York Water Company (NASDAQ:YORW)’s revenue. This growth is expected to be aided by its capital plan and strategic acquisitions.

8) California Water Service Group (NYSE:CWT)

 % Decline Over Past Year: ~4.4%

Average Upside Potential: ~25.2%

Number of Hedge Fund Holders: 18

California Water Service Group (NYSE:CWT) provides water utility and other related services in California, Washington, New Mexico, Hawaii, and Texas. The company’s Chief stated that its financial results for Q3 2024 were in line with expectations. California Water Service Group (NYSE:CWT) continued to benefit from the effects of the 2021 California General Rate Case decision received on March 7, 2024. The company’s capital investments during the nine months ended September 30, 2024 rose to a record total of $332.2 million, exhibiting an increase of 21% over the same period last year.

California Water Service Group (NYSE:CWT) has proposed to invest over $1.6 billion in its districts from 2025-2027  to support its ability to offer a reliable supply of high-quality water and enhance sustainability. The company has submitted a GRC which included Infrastructure Improvement Plans for 2025-2027.  In the application, California Water Service Group (NYSE:CWT) proposed to adjust rates to increase total revenue by $140.6 million (17.1%) in 2026, $74.2 million (7.7%) in 2027, and $83.6 million (8.1%) in 2028.

Moving forward, the company is well-placed to capitalize on the growth opportunities provided by the broader utility sector as a result of infrastructure investments, regulatory support, and sustainability initiatives. Also, rate base growth and long-term capital investments can support California Water Service Group (NYSE:CWT)’s prospects.