1. Public Service Enterprise Group Incorporated (NYSE:PEG)
Number of Hedge Fund Holders: 142
Public Service Enterprise Group Incorporated (NYSE:PEG) operates in electric and gas utility and nuclear generation businesses. The company’s businesses include Public Service Electric and Gas Co. (PSE&G), PSEG Power, and PSEG Long Island. Morgan Stanley analyst David Arcaro is optimistic about the company’s stock. The analyst’s views stem from a combination of factors demonstrating a positive growth outlook for the company. Furthermore, the analyst opines that the 2025 EPS guidance remains closely aligned with market expectations, aided by new distribution rates, investment recovery mechanisms, and a higher rate base.
For 2025, Public Service Enterprise Group Incorporated (NYSE:PEG) initiated a non-GAAP operating earnings guidance of $3.94 – $4.06 per share, demonstrating a rise of ~9% at the midpoint above 2024 results. The 2025-2029 capital spending plan of $22.5 billion – $26 billion consists of $21 billion – $24 billion of regulated investment, reflecting a rise of ~$3 billion from its prior five-year plan of $18 billion to $21 billion. This increase was supported by incremental investments for PSE&G to address the increased customer demand, modernize infrastructure, and CEF-EE II programs.
Sound Shore Management, an investment management firm, released its investor letter for Q3 2024. Here is what the fund said:
“In recent letters we have discussed the resurgence of nuclear power as a base load electricity source and the opportunities our team has uncovered in the power generation space. Public Service Enterprise Group Incorporated (NYSE:PEG), better known as PSE&G, is another example and one of our strongest contributors for the three-month period. The company is a “hybrid” regulated utility and unregulated nuclear power generator that we were able to purchase at an attractive price relative to its earning power. PSE&G’s well managed, regulated utilities provide consistent returns that we expect will grow steadily with their rate bases. As well, we believe there is unappreciated value in their nuclear plants which sit in an unregulated subsidiary that can capture the upside potential of increased power prices. Carbon-free and reliable electricity commands a premium in the marketplace, as seen in recently announced 20-year long data center sales contracts by peer companies. Presently, PSE&G is in discussions to do the same. Our projections estimate this provides a 20% or more upside to earnings for PSE&G from here over the next few years.”
While we acknowledge the potential of PEG 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 time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than PEG but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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