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.
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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.
An overhead tracking shot of a high-tension power line and its intricate web of cables.
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.
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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 2nd 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.
7) Brookfield Renewable Partners L.P. (NYSE:BEP)
% Increase Over Past Year: ~0.17%
Average Upside Potential: ~31.4%
Number of Hedge Fund Holders: 5
Brookfield Renewable Partners L.P. (NYSE:BEP) owns a portfolio of renewable power generating facilities mainly in North America, Colombia, and Brazil. Analyst Elizabelle Pang from DBS reiterated a “Buy” rating on the company’s stock, providing a price target of $33.00. The rating is backed by the robust growth potential and financial stability of the company. Brookfield Renewable Partners L.P. (NYSE:BEP) remains well-placed to capitalize on positive market trends, including higher demand from data centers and potential M&As.
The analyst opines that the company’s significant capital reserves and strategic asset recycling activities will help its investment strategy without the requirement for additional equity issuance. Given its diversified portfolio and a strong proven track record of providing high dividend yields, Brookfield Renewable Partners L.P. (NYSE:BEP) happens to be a leading player in the broader renewable energy sector, making it a long-term investment opportunity. After several decades of modest electricity demand growth, Brookfield Renewable Partners L.P. (NYSE:BEP) has been witnessing a dramatic shift fueled by the AI revolution. The company’s pipeline of growth opportunities remains strong and is focused on adding platforms and projects to meet the increased demand from corporate buyers of electricity.
6) PG&E Corporation (NYSE:PCG)
% Decline Over Past Year: ~5.6%
Average Upside Potential: ~40.2%
Number of Hedge Fund Holders: 74
PG&E Corporation (NYSE:PCG), through its subsidiary, Pacific Gas and Electric Company, is engaged in the sale and delivery of electricity and natural gas to customers in northern and central California, the United States. BMO Capital upped the stock’s price target to $23 from $21, keeping an “Outperform” rating after its Q4 2024 results. The analyst believes that PG&E Corporation (NYSE:PCG) had a strong year operationally with EPS consistent with consensus estimates.
Furthermore, as per the analyst, the company’s stock has been trading at a deep discount despite top-tier EPS and rate base growth, with numerous potential catalysts to realize multiple expansions, like an upgrade to investment grade and a growing dividend yield. PG&E Corporation (NYSE:PCG)’s growth strategy is aided by strong capital investment opportunities. It plans to invest in grid resiliency, the expansion of transmission and distribution infrastructure, and wildfire mitigation.
Over the long term, with California leading the AI boom, electricity demand is projected to increase, supporting the growth prospects of public utilities, including PG&E Corporation (NYSE:PCG). The company has increased the guidance range for projected 2025 non-GAAP core earnings from $1.47 – $1.51 per share to $1.48 – $1.52 per share. Overall, PG&E Corporation (NYSE:PCG) is expected to continue to benefit from California’s energy policies, regulatory-backed rate increases, increased electrification and infrastructure upgrades.
5) Consolidated Water Co. Ltd. (NASDAQ:CWCO)
% Decline Over Past Year: ~10.2%
Average Upside Potential: ~42.2%
Number of Hedge Fund Holders: 12
Consolidated Water Co. Ltd. (NASDAQ:CWCO) is engaged in designing, constructing, managing, and operating water production and water treatment plants. In Q3 2024, the company’s revenue and profitability remained consistent with its expectations, considering the completion of 2 large design-build projects. Consolidated Water Co. Ltd. (NASDAQ:CWCO) highlighted the continuing trend of increasing retail water sales in its exclusive utility service area on Grand Cayman because of continued business and population growth on the island.
Consolidated Water Co. Ltd. (NASDAQ:CWCO)’s ongoing $147 million design-build-operate desalination plant project in Hawaii has been progressing through development towards the construction phase. At the macro level, higher water scarcity has been developing interest in advanced treatment and desalination solutions for impaired resources. With the rise in water supply challenges, there continues to be increased demand for the specialized capabilities Consolidated Water Co. Ltd. (NASDAQ:CWCO) provides.
Some of the specific positive factors include the healthy water sales growth in Grand Cayman and long-term recurring revenue from Consolidated Water Co. Ltd. (NASDAQ:CWCO)’s Caribbean-based bulk water business and the US-based O&M business. Therefore, growth in the utility sector equates to increased demand for water infrastructure, desalination, and treatment services, aiding the company’s growth prospects.
4) The AES Corporation (NYSE:AES)
% Decline Over Past Year: ~34.6%
Average Upside Potential: ~44.4%
Number of Hedge Fund Holders: 53
The AES Corporation (NYSE:AES) operates as a diversified power generation and utility company in the US and internationally. The company’s transition towards renewables remains in line with the global trends favoring clean energy solutions. It has been leveraging its current expertise in power generation in a bid to capitalize on the ever-growing demand for sustainable energy sources. Also, The AES Corporation (NYSE:AES)’s diversification throughout different energy sectors offers a degree of stability during market fluctuations.
With governments and corporations prioritizing clean energy solutions to cater to climate change, the company’s strategic focus on expanding renewable capacity might fuel significant long-term growth. The AES Corporation (NYSE:AES)’s diversified portfolio, including utilities, energy infrastructure, and new energy technologies together with renewables, offers a solid foundation for growth. Its asset sales program can improve the company’s financial position and aid its strategic transition to renewable energy.
Notably, while announcing Q3 2024 results, The AES Corporation (NYSE:AES) mentioned that it has announced or closed transactions for roughly three-quarters of its $3.5 billion asset sale proceeds target through 2027. Its PPA backlog, which consists of projects with signed contracts, but which are not yet operational, stood at 12.7 GW, including 4.0 GW under construction.
3) Artesian Resources Corporation (NASDAQ:ARTNA)
% Decline Over Past Year: ~10.4%
Average Upside Potential: ~44.5%
Number of Hedge Fund Holders: 9
Artesian Resources Corporation (NASDAQ:ARTNA) provides water, wastewater, and other services in Delaware, Maryland, and Pennsylvania. In Q3 2024, the company’s revenues came in at $29.1 million, representing a 9.7% growth compared to the revenues for 3 months ending September 30, 2023. Artesian Resources Corporation (NASDAQ:ARTNA)’s water sales revenue rose $2.5 million, or 11.3%, mainly because of a temporary rate increase of 14.6% of gross water sales placed into effect on November 28, 2023, as per Delaware law. Overall, the increase in water sales revenues was aided by new customers served, increased customer consumption, and the resolution of its Delaware water rate case.
As part of Artesian Resources Corporation (NASDAQ:ARTNA)’s ongoing effort to ensure high-quality reliable service, $30.9 million was invested in water and wastewater infrastructure projects during the first 9 months of 2024. With states making significant investments towards the modernization of water infrastructure because of aging pipelines and the requirement for sustainable water management, Artesian Resources Corporation (NASDAQ:ARTNA) continues to expand water and wastewater infrastructure, making it well-placed for such industry trends. With the broader utilities sector experiencing growth, the company is expected to reap benefits stemming from infrastructure investments, M&A opportunities, and regulatory incentives.
2) Edison International (NYSE:EIX)
% Decline Over Past Year: ~22.4%
Average Upside Potential: ~47.2%
Number of Hedge Fund Holders: 38
Edison International (NYSE:EIX) is engaged in the generation and distribution of electric power. UBS analyst Gregg Orrill upgraded the company’s stock from “Neutral” to “Buy.” The firm believes that California’s $21 billion wildfire fund is sufficient enough to cover the Eaton fire. The analyst expects a positive shift in the calendar of events. The company, with the help of its subsidiary Southern California Edison (SCE), remains a key player in California’s electric power sector. Edison International (NYSE:EIX)’s growth strategy remains closely aligned with California’s clean energy transition and electrification goals.
The company remains well-placed to benefit from the expansion of EVs and electrification trends within SCE’s service territory. The EV infrastructure expansion and the overall rise in electricity demand because of electrification efforts can fuel substantial growth in Edison International (NYSE:EIX)’s rate base. This can result in increased revenues and earnings over the long term. Its strategic investments in grid modernization and advanced metering infrastructure continue to aid its ability to meet the growing electricity needs of California’s dynamic energy landscape.
ClearBridge Investments, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“From a sector perspective, meanwhile, our utilities overweight was positive, with Edison International (NYSE:EIX) our top individual contributor. The company reached a tentative deal to recoup $1.7 billion of wildfire and mudslide expenses in California, bolstering its balance sheet, increasing earnings and demonstrating the favorable regulatory environment in California, benefiting both Edison as well as Sempra, our largest utility holding. Another rate-sensitive area — real estate — was the second-best sector performer as rate cuts boosted valuations in this area. Our REITs underweight, however, was a headwind during the period.”
1) Global Water Resources, Inc. (NASDAQ:GWRS)
% Decline Over Past Year: ~10%
Average Upside Potential: ~50.0%
Number of Hedge Fund Holders: 4
Global Water Resources, Inc. (NASDAQ:GWRS) is a water resource management company, which is engaged in owning, operating, and managing regulated water, wastewater, and recycled water systems primarily in metropolitan Phoenix and Tucson, Arizona. The revenues generated by Global Water Resources, Inc. (NASDAQ:GWRS)’s water, wastewater, and recycled water service went up by 2.2%, mainly because of strong growth in connections and its scheduled rate increase. This includes a full quarter contribution from the company’s rate case approval for 7 of its regulated utilities in Pima County. The approval enables a revenue increase totaling ~$0.4 million annually. To provide a brief context, a rate case is referred to as the formal regulatory process where a utility company seeks approval from the Public Utilities Commission to change the rates the company charges.
Elsewhere, the company reached a unanimous settlement agreement related to the Global Water – Farmers Water Company, Inc. (GW-Farmers) general rate case application it filed with the Arizona Corporation Commission (ACC). This is the first rate case submitted for GW-Farmers since Global Water Resources, Inc. (NASDAQ:GWRS) acquired the utility in 2023. If approved, the new rates are projected to provide a revenue increase of ~$1.1 million on an annualized basis. The increase will be implemented in 3 stages: 50% on May 1, 2025, 25% on November 1, 2025, and 25% on May 1, 2026.
While we acknowledge the potential of GWRS 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 GWRS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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