1. NextEra Energy Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 69
NextEra Energy Inc. (NYSE:NEE) generates, transmits, distributes, and sells electric power to retail and wholesale customers across North America. Using a diverse mix of energy sources, which include wind, solar, nuclear, and natural gas, it has a net generating capacity of ~33,276 megawatts. It also develops and operates clean energy solutions and participates in wholesale energy markets.
The company’s $150+ billion decade-long investment in energy infrastructure, with another $120 billion planned, is the key to its growth. This includes nuclear, gas, and renewables/storage, which drive consistent financial outperformance. The company added 8.7 GW of renewables/storage in 2024, with Energy Resources booking a record 12 GW in new projects, marking a 30% increase year-over-year and totaling a 25+ GW backlog. This renewable infrastructure expansion fuels growth.
FPL’s (Florida Power & Light) $8.2 billion 2024 investment in grid modernization and generation strengthens reliability and drives stable returns. It’s the largest electric utility in the state of Florida and one of the largest in the US. FPL is a subsidiary of NextEra Energy Inc. (NYSE:NEE). $36 billion more is planned through 2025, which emphasizes utility infrastructure development. The company’s infrastructure focus translates to 8%+ EPS growth in 2024 and a 10%+ CAGR since 2021. These investments directly drive revenue and profitability.
Following the company’s Q4 2024 report, Argus analyst Marie Ferguson lowered the price target to $86 from $90 on January 27, while maintaining a Buy rating. The price target adjustment reflects a correction after the 2024 sector momentum driven by interest rates. However, analysts remain optimistic about the company’s Florida operations due to the state’s economic and population growth.
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.”
While we acknowledge the growth potential of NextEra Energy Inc. (NYSE:NEE), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NEE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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