In this article, we will take a look at the 12 Best Electrical Infrastructure Stocks to Buy According to Analysts.
The United States is witnessing a notable surge in electricity demand, driven by unprecedented electrification, the rapid expansion of AI-driven data centers, and a resurgence in industrial reshoring and manufacturing. As of September 2024, electricity demand rebounded with a 1.8% increase, reversing a 1.7% decline during the same period in 2023, aided by favorable weather conditions. This uptick signals a sustained period of growth, marking a departure from two decades of stagnant demand and potentially reshaping the electricity landscape in profound ways.
According to Deloitte, this demand has spurred a corresponding increase in power generation. By September 2024, utility-scale power generation reached approximately 3,287 billion kWh, reflecting a 3% year-over-year growth. Renewable energy, particularly solar, led the charge, with a 30% increase compared to 13% during the same period in 2023. In that same vein, solar energy is expected to be the fastest-growing energy source by year-end, potentially achieving a 34% growth rate. Moreover, the rapid adoption of digitalization and AI has significantly heightened the demand for data centers across the United States. To keep pace with this adoption, McKinsey projects that data center power requirements might triple by 2030, increasing from 3–4% of the nation’s total electricity demand to approximately 11–12%. This will necessitate a substantial rise in electricity production, signaling a dramatic shift in a country where power demand has remained relatively flat since 2007. By 2030, data centers could account for 30–40% of all net new electricity demand, alongside rising needs from domestic manufacturing, electric vehicles, and electrolyzers.
Furthermore, in response to escalating climate-driven disasters and an electricity grid increasingly reliant on intermittent renewable energy, the U.S. is rapidly deploying large-scale battery systems to help prevent power outages. From minimal installations just a few years ago, the country has now added over 20 gigawatts of battery capacity to its electric grid, with 5 GW installed in the first seven months of this year alone, according to the EIA. This rapid expansion is equivalent to adding the output capacity of 20 nuclear reactors to the grid in just four years. The EIA forecasts that this capacity could double to 40 GW by 2025 if planned expansions proceed as expected.
On the other hand, transformations in policy, market dynamics, and technological advancements are also driving significant shifts in electricity generation, presenting new challenges for the US electric grid. Much of the country’s high-voltage transmission infrastructure dates back to the 1960s and 1970s, leaving it ill-equipped to handle current and future grid demands. Policy changes could further shape the landscape. For instance, Bernstein analysts have highlighted potential risks to electrical infrastructure stocks if the incoming Trump administration repeals the $7,500 electric vehicle tax credit. Such a move, reportedly under consideration as part of broader tax reform, would eliminate a key driver of electrical distribution infrastructure investment. EV charging typically occurs at home, and a growing EV installed base has been a significant catalyst for grid investments. Bernstein estimates that repealing the tax credit would lower electricity demand growth from EVs, reducing the compound annual growth rate from 0.6% to 0.4% over the next five years. To illustrate the potential impact, they pointed to Germany’s rollback of EV subsidies in 2023, which led to a 30% drop in EV-related demand year-to-date in 2024.
All things considered, leading electrical infrastructure stocks are poised for substantial gains, supported by the approval of over 46,000 infrastructure projects spanning a wide range of industries, and a monumental $1.2 trillion investment allocated by the U.S. administration.
Our Methodology
To compile our list of the best electrical infrastructure stocks to buy according to analysts, we analyzed various stock screeners and ETFs, selecting stocks based on their upside potential as of December 16. The stocks are ranked by their average upside potential, from lowest to highest, based on price targets. Additionally, we included the number of hedge funds holding stakes in these stocks, using Insider Monkey’s Q3 hedge fund data.
Why do we care about what hedge funds do? 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).
12. MasTec Inc. (NYSE:MTZ)
Average Analyst Upside: 6.58%
Number of Hedge Fund Holders: 44
MasTec Inc. (NYSE:MTZ) is a global infrastructure engineering and construction company specializing in the engineering, construction, installation, maintenance, and upgrades of energy, utility, and communications infrastructure. A leading construction company with extensive geographic coverage, the company is well-equipped to seize opportunities in the growing AI data center market and the rising demand for high-speed wireless connectivity.
Truist Securities maintained its positive stance on MasTec Inc. (NYSE:MTZ), reiterating a Buy rating and a price target of $173. The firm highlighted MasTec’s above-average earnings visibility heading into 2025, supported by recently awarded large contracts in Power Delivery and market share gains with key customers in the Communications sector. Despite a strong year-to-date performance, with shares surging 88.60% compared to the S&P 500’s 28.07% rise, Truist believes further upside potential might exist.
A key milestone for the company is its involvement in a 700-mile high-voltage transmission project set to begin in early 2025, positioning the Power Delivery segment for long-term growth. Additionally, the Clean Energy & Infrastructure segment stands to benefit from increased investments in power generation.
MasTec Inc. (NYSE:MTZ) delivered robust third-quarter results, reporting $3.3 billion in revenue and $306 million in adjusted EBITDA. Moreover, the company raised its full-year revenue guidance to $12.225 billion and adjusted EPS estimates to $3.75.
11. Edison International (NYSE:EIX)
Average Analyst Upside: 8.38%
Number of Hedge Fund Holders: 29
Edison International (NYSE:EIX) and its subsidiaries focus on generating and distributing electric power across a 50,000-square-mile area in southern California, serving residential, commercial, industrial, agricultural, and public sector customers. The company also offers consulting services to help institutions lower energy costs by improving the efficiency of their power usage.
Edison International’s growth strategy revolves around its role as a “pure wires utility,” a focus that analysts view positively. Moreover, the company’s investment plans align closely with California’s clean energy goals, with capital expenditures supporting the state’s transition to cleaner energy sources. Looking ahead, Edison International (NYSE:EIX) aims to achieve 100% carbon-free power distribution by 2045.
In November, Jefferies initiated coverage on Edison International (NYSE:EIX) with a Buy rating and a price target of $93. The firm projects total shareholder returns exceeding 18%, supported by an expected 7% compound annual growth rate in EPS. This outlook factors in a 40-60% recovery from legacy wildfire costs and is expected to strengthen the company’s financial position significantly.
For Q3 2024, Edison International (NYSE:EIX) reported core EPS of $1.51, bringing year-to-date EPS to $3.88. The company updated its 2024 core EPS guidance to a range of $4.80 to $5.00. Additionally, Edison International (NYSE:EIX) plans to file ERP (Energy Resource Plans) and AMI (Advanced Metering Infrastructure) proposals within the next 6 to 12 months and expects growth opportunities in AI-driven data centers in California.
On September 24, Edison International (NYSE:EIX) declared a quarterly dividend of $0.78 per share, consistent with its previous payout. Notably, the company has maintained a 20-year streak of consecutive dividend growth.
ClearBridge Large Cap Value Strategy stated the following regarding Edison International (NYSE:EIX) in its Q3 2024 investor letter:
“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.”
10. Emcor Group Inc. (NYSE:EME)
Average Analyst Upside: 8.89%
Number of Hedge Fund Holders: 40
Emcor Group Inc. (NYSE:EME) is a leader in mechanical and electrical construction, industrial and energy infrastructure, and building services, offering solutions such as electrical and mechanical construction, energy management, and facility maintenance. The company has thrived this year, fueled by the AI data center boom and its strong connections with hyperscale data center customers, domestic semiconductor companies, and clean energy component manufacturers.
In Q3 2024, Emcor Group Inc. (NYSE:EME) reported record-breaking revenues of $3.7 billion, marking a 15.3% increase year-over-year. Operating income surged 54.7% to $363.5 million, while diluted earnings per share rose sharply to $5.80. Additionally, the company reached a significant milestone with Remaining Performance Obligations (RPOs) hitting $9.8 billion, reflecting a 13.4% growth compared to the previous year. Emcor’s growth has been supported by high demand in sectors like data centers, high-tech manufacturing, and healthcare, alongside strategic investments in Virtual Design and Construction (VDC) to boost productivity and safety. However, U.S. Building Services revenue declined by 2.5% due to non-renewed contracts, while U.K. Building Services saw a drop in operating income due to a less favorable project mix, leading to reduced operating margins. Despite these challenges, the company anticipates 2024 revenues of at least $14.5 billion and diluted EPS between $20.50 and $21.
Wall Street analysts have issued 12-month price targets for Emcor Group Inc. (NYSE:EME), with an average target of $520 and a high forecast of $600. This average price target implies an 8.89% upside from the current trading price of $477.20.
As of the end of Q3 2024, 40 hedge funds tracked by Insider Monkey held positions in Emcor Group Inc. (NYSE:EME), down from 45 in the previous quarter. The combined value of these stakes exceeds $1.35 billion.
9. American Electric Power Company, Inc. (NASDAQ:AEP)
Average Analyst Upside: 8.99%
Number of Hedge Fund Holders: 36
American Electric Power Company, Inc. (NASDAQ:AEP), headquartered in Columbus, Ohio, delivers reliable and affordable electricity to 5.6 million customers across 11 states. The company operates the largest electric transmission system in the U.S., spanning over 40,000 miles, and continues to make significant investments in renewable energy initiatives, aligning with broader utility sector trends.
The company is poised to capitalize on the growing renewable energy trend, targeting annual growth of 15-20% in its renewable energy portfolio. By 2033, American Electric Power Company, Inc. (NASDAQ:AEP) plans to add up to 8,982 megawatts of wind power and 7,470 megawatts of solar energy. To that end, SWEPCO, an AEP subsidiary, recently announced three renewable projects currently under construction. These include the 200-MW Diversion Wind Farm in Texas, expected to be operational by December 2024, the 598-MW Wagon Wheel Wind Facility in Oklahoma, slated for completion by December 2025, and the 72.5-MW Rocking R Solar Facility in Louisiana.
On December 2, BMO Capital raised its price target for American Electric Power (NASDAQ:AEP) to $108, up from the previous $104, while maintaining an Outperform rating. The revised forecast reflects a 6.0% earnings per share CAGR from 2024 to 2028, slightly below the company’s own projected range of 6-8%. Despite this more conservative outlook, BMO Capital acknowledges potential for higher growth than its estimates.
As per Insider Monkey’s Q3 data, 36 hedge funds held stakes in American Electric Power Company, Inc. (NASDAQ:AEP), compared to 35 in the previous quarter.
8. DTE Energy Company (NYSE:DTE)
Average Analyst Upside: 10.68%
Number of Hedge Fund Holders: 32
DTE Energy Company (NYSE:DTE), Michigan’s largest utility provider, develops and manages energy-related businesses, serving approximately 2.3 million customers in Southeast Michigan through its 11,084-megawatt electric system capacity. Additionally, the company is expanding its reach beyond traditional utility operations, with a strong focus on its Vantage platform, which delivers renewable energy and industrial energy services. Moreover, DTE Energy Company (NYSE:DTE) is targeting the data center market as well, citing significant opportunities and strong interest from hyperscale operators.
On December 3, UBS upgraded DTE Energy Company (NYSE:DTE) from Neutral to Buy, raising the price target to $143 from $129, citing a market mispricing of DTE’s strengths, particularly within Michigan’s regulatory environment. The firm emphasized the improving outlook for DTE’s utility EPS, which makes up 86% of its business, driven by reduced regulatory risks and projected rate base growth, expected to exceed the current 8% due to strategic resource planning and delivery investments.
DTE Energy Company (NYSE:DTE) reported strong Q3 results, with adjusted earnings per share of $2.22, supported by higher electric rates, favorable weather, and tax timing benefits. Operating earnings reached $460 million, fueled by increased DTE Electric performance. Additionally, the company launched the Sauk Solar Park, Michigan’s largest solar installation, which will provide clean energy to 40,000 homes.
As of Q3 2024, 32 hedge funds held stakes in DTE Energy Company (NYSE:DTE), with a combined investment of $560 million.
7. Duke Energy Corporation (NYSE:DUK)
Average Analyst Upside: 13.18%
Number of Hedge Fund Holders: 46
Duke Energy Corporation (NYSE:DUK), a leading U.S.-based energy company, operates through two primary segments: Electric Utilities and Infrastructure (EU&I) and Gas Utilities and Infrastructure (GU&I). The company is actively advancing its clean energy transition plan, aiming to achieve net-zero methane emissions from natural gas services and a 50% reduction in carbon emissions from electric generation by 2030.
BMO Capital recently revised its price target for Duke Energy Corporation (NYSE:DUK) to $124 from $128, while maintaining an Outperform rating. This adjustment followed Duke Energy’s Q3 earnings report, which revealed an EPS of $1.62—below BMO’s estimate of $1.68 and the consensus estimate of $1.69. While the company reaffirmed its 2024 full-year earnings guidance of $5.85 to $6.10, management anticipates results to land in the lower half of this range, citing financial impacts from recent storms, including restoration costs and revenue losses caused by widespread outages.
Despite short-term headwinds, Duke Energy’s management remains confident in its long-term EPS growth outlook of 5% to 7%, starting from the 2024 midpoint. The company plans to present a detailed update on its capital strategy, financing plans, and load growth by Q4.
Duke Energy Corporation (NYSE:DUK) has a strong track record of rewarding shareholders, with 97 consecutive years of dividend payments and 12 consecutive years of dividend increases. On November 15, the company declared a quarterly dividend of $1.045 per share, consistent with the previous payout, which was scheduled for December 16.
Investor sentiment showed some strengthening in Q3, with 46 hedge funds holding stakes in Duke Energy Corporation (NYSE:DUK), up from 37 funds in the prior quarter, according to Insider Monkey’s database.
6. Exelon Corporation (NASDAQ:EXC)
Average Analyst Upside: 14.70%
Number of Hedge Fund Holders: 34
Exelon Corporation (NASDAQ:EXC), headquartered in Chicago, is a leading energy provider with a diversified portfolio that includes nuclear, solar, wind, and natural gas generation assets. The company also plays a critical role in energy distribution and transmission through its network of subsidiaries.
The company remains committed to significant infrastructure investments, allocating $34.5 billion to enhance energy infrastructure. On December 9, Exelon subsidiary ComEd marked a milestone by launching a community solar project in Boone County, developed in partnership with Ameresco. Built on a former landfill, the project provides clean energy to support county government operations and local businesses.
In its fiscal third quarter ended September 30, 2024, Exelon Corporation (NASDAQ:EXC) reported operating revenues of $6.15 billion, a 2.9% increase year-over-year. Operating income grew 6.5% to $1.20 billion. Additionally, the company posted a net income of $707 million attributable to common shareholders, with non-GAAP operating earnings per share rising 6% year-over-year to $0.71.
Investor interest slightly declined in Q3 2024, with 34 hedge funds holding stakes in Exelon Corporation (NASDAQ:EXC), compared to 37 in the previous quarter, according to Insider Monkey’s database.
5. Constellation Energy Corporation (NASDAQ:CEG)
Average Analyst Upside: 17.60%
Number of Hedge Fund Holders: 78
Constellation Energy Corporation (NASDAQ:CEG) is a key player in the U.S. electricity industry, with operations spanning five major regions: Mid-Atlantic, Midwest, New York, ERCOT, and Other Power Regions. The company maintains a diverse energy portfolio, comprising nuclear, wind, solar, natural gas, and hydroelectric facilities, delivering a clean energy capacity of over 23,000 megawatts.
Constellation Energy’s extensive portfolio of firm green power, paired with a competitive retail business, positions it well to meet the rising demand for decarbonized electricity products. Among the company’s notable green energy initiatives, the planned restart of Unit-1 at the Three Mile Island nuclear power plant, alongside a groundbreaking Power Purchase Agreement (PPA) with Microsoft are stand outs. Under this agreement, Microsoft will purchase the entire output from the restarted Three Mile Island unit to power its data centers.
In its third quarter financial results, Constellation Energy Corporation (NASDAQ:CEG) reported earnings per share of $2.74, beating analyst expectations for the third time in four quarters. Quarterly revenue grew to $6.55 billion, compared to $6.11 billion in the previous year, highlighting the company’s steady growth and financial resilience.
Wall Street analysts maintain a Moderate Buy consensus rating for Constellation Energy Corporation (NASDAQ:CEG). Of the 15 analysts covering the stock over the past year, 10 have issued buy ratings, reflecting broad confidence in the company’s outlook.
According to Insider Monkey’s Q3 database, 78 hedge funds held bullish positions in Constellation Energy Corporation (NASDAQ:CEG), up from 71 in the previous quarter.
4. PG&E Corporation (NYSE:PCG)
Average Analyst Upside: 17.86%
Number of Hedge Fund Holders: 49
PG&E Corporation (NYSE:PCG), through its subsidiary Pacific Gas and Electric Company, distributes electricity and natural gas to customers across California. Leveraging a mix of energy sources—nuclear, hydroelectric, fossil fuel-fired, fuel cell, and photovoltaic technologies—PG&E ensures reliable power generation for its customers.
On December 12, RBC Capital reiterated its Outperform rating on PG&E Corporation (NYSE:PCG) and maintained a $24 price target, citing the utility’s strong wildfire mitigation and capital investment strategies. PG&E’s wildfire prevention efforts have been particularly effective, with no structures destroyed in its High Fire-Threat Districts (HFTDs) this year, despite a rise in wildfires statewide. The company has also benefited from financial safeguards under AB 1054, with PG&E receiving its first two payments under the program.
PG&E’s capital expenditure (capex) plan remains ambitious, with the company accelerating $1 billion into its five-year plan during Q3. Financing for these investments was secured through junior subordinated notes, underscoring the company’s sound financial strategy. Additionally, PG&E Corporation (NYSE:PCG) has filed a supplemental request for $3.1 billion in projects for 2025-2026, which is expected to add $2.8 billion to its overall project pipeline. The company’s focus on customer-driven investments aligns with California’s legislative initiatives, such as SB 410 and SB 884, and is further supported by a 3.5 GW data center pipeline.
According to Insider Monkey’s Q3 database, 49 hedge funds held positions in PG&E Corporation (NYSE:PCG), up from 46 funds in the previous quarter.
3. NextEra Energy, Inc. (NYSE:NEE)
Average Analyst Upside: 19.70%
Number of Hedge Fund Holders: 69
NextEra Energy, Inc. (NYSE:NEE), one of North America’s leading utility companies, is involved in generating, transmitting, distributing, and selling electricity. The company also engages in energy commodity trading and operates electric generation facilities within wholesale energy markets.
On another front, NEE is advancing its capital recycling strategy with a target of $5-6 billion in asset sales. Recently, the company took a significant step toward this goal by agreeing to sell a partial interest in a wind and solar project portfolio to Blackstone for approximately $900 million. This deal highlights NEE’s ability to monetize assets while freeing up capital to invest in new growth opportunities.
In its third-quarter results, NextEra Energy (NYSE:NEE) delivered strong performance, surpassing earnings expectations. Net income increased to $1.852 billion, or $0.90 per share, compared to $1.219 billion or $0.60 per share in the same period last year. Adjusted earnings came in at $2.127 billion, or $1.03 per share, while revenue grew 5.5% year-over-year to $7.567 billion, up from $7.172 billion in Q3 of the prior year.
On October 18, NextEra Energy, Inc. (NYSE:NEE) announced a quarterly dividend of $0.515 per share, consistent with its previous payout. Notably, the company has increased its dividends for 28 consecutive years, underscoring its commitment to shareholder returns. As of December 17, the stock offers a 2.85% dividend yield.
According to Insider Monkey’s Q3 2024 database, 69 hedge funds held positions in NextEra Energy, Inc. (NYSE:NEE), down from 73 funds in the previous quarter. The collective value of these stakes exceeded $2.47 billion.
Madison Sustainable Equity Fund stated the following regarding NextEra Energy, Inc. (NYSE:NEE) in its Q3 2024 investor letter:
“The top contributors in the quarter were NextEra Energy, Inc. (NYSE:NEE), Oracle Corporation, Progressive Corporation, Equifax Inc., and United Healthcare. NextEra has continued to perform well given its strong position in the renewable energy space, increasing demand for power, its transmission capabilities, as well as a tailwind from lower interest rates.”
2. Clearway Energy Inc. (NYSE:CWEN)
Average Analyst Upside: 23.79%
Number of Hedge Fund Holders: 29
Clearway Energy Inc. (NYSE:CWEN) is a leading renewable energy company in the United States, managing a portfolio of 6,000 MW of installed capacity across various wind and solar projects. Back in 2022, the company sold its thermal business, raising $1.35 billion in cash to fuel the growth of its renewable energy assets, which are boosting its ability to increase its dividend, providing greater visibility into its future growth potential. Since then, the company has been actively investing in renewable energy, and as a result, expects to increase its dividend toward the upper end of its 5% to 8% annual target range through at least 2026.
Back in October, Clearway Energy Inc. (NYSE:CWEN) announced it had secured financing and started construction on two standalone solar and energy storage projects in Hopkins County, Texas. These projects—the 300-MW Pine Forest Solar and 200-MW Pine Forest Storage facilities—represent a $665 million investment aimed at enhancing Texas’ alternative energy infrastructure. Additionally, the company is advancing large-scale initiatives like the Daggett Storage I Project in San Bernardino County, featuring a 113.5 MW battery storage facility within a larger 482 MW solar and 394 MW storage complex.
On November 25, BofA Securities initiated coverage on Clearway Energy Inc. (NYSE:CWEN) with a Buy rating and a $33 price target, projecting a 22% total return. The firm highlighted Clearway’s strong relationship with its sponsor, Clearway Energy Group, which holds a 41.8% economic interest in the company. This partnership provides Clearway with access to a 30 GW development pipeline, ensuring a consistent flow of new acquisitions.
As of Q3 2024, 29 hedge funds held positions in Clearway Energy Inc. (NYSE:CWEN), with total stakes valued at $174.2 million.
1. First Solar, Inc. (NASDAQ:FSLR)
Average Analyst Upside: 47.33%
Number of Hedge Fund Holders: 59
First Solar, Inc. (NASDAQ:FSLR) is a leading force in the renewable energy sector, specializing in utility-scale solar power plants. The company has delivered numerous large-scale photovoltaic (PV) installations globally, contributing significantly to the adoption of solar energy. With an installed generation capacity of approximately 25 gigawatts and a growing project backlog, First Solar is well-positioned to expand its market share.
On December 12, Truist Securities reaffirmed its Buy rating on First Solar, Inc. (NASDAQ:FSLR) and maintained a $300 price target, highlighting the company’s robust growth outlook. This follows First Solar’s announcement of a Tax Credits Sale agreement with Visa Inc., under which the energy company will transfer $645 million in tax credits to Visa for $616 million—a purchase price of $0.955 per dollar. Truist projects that First Solar, Inc. (NASDAQ:FSLR) will generate $1 billion in tax credits in 2024 and $1.6 billion in 2025, with expectations of similar monetization deals for its 2025 credits.
The company is also making significant strides in manufacturing expansion. First Solar, Inc. (NASDAQ:FSLR) recently inaugurated a $1.1 billion facility in Alabama, which will add 3.5 gigawatts of vertically integrated nameplate solar manufacturing capacity. Furthermore, the company is on track to commence operations at its Louisiana facility in the second half of 2025, further enhancing its U.S.-based production capabilities.
While we acknowledge the potential of FSLR, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than FSLR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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