In this article, we discuss 5 best electric utility stocks to invest in. If you want to see more stocks in this selection, check out 10 Best Electric Utility Stocks To Invest In.
5. Duke Energy Corporation (NYSE:DUK)
Number of Hedge Fund Holders: 30
Duke Energy Corporation (NYSE:DUK) is a North Carolina-based energy company that operates through three segments – Electric Utilities and Infrastructure, Gas Utilities and Infrastructure, and Commercial Renewables. The Electric Utilities and Infrastructure segment generates, transmits, distributes, and sells electricity in the Carolinas, Florida, and the Midwest. Duke Energy Corporation (NYSE:DUK) is one of the best utility stocks to invest in.
On October 24, investment advisory Guggenheim maintained a Buy recommendation on Duke Energy Corporation (NYSE:DUK) but lowered the firm’s price target on the shares to $97 from $119. Analyst Shahriar Pourreza issued the ratings update.
According to Insider Monkey’s data, Duke Energy Corporation (NYSE:DUK) was part of 30 hedge fund portfolios at the end of Q2 2022, compared to 32 funds in the last quarter. Jim Simons’ Renaissance Technologies is a prominent position holder in the company, with 1.08 million shares worth $116.20 million.
4. American Electric Power Company, Inc. (NASDAQ:AEP)
Number of Hedge Fund Holders: 30
American Electric Power Company, Inc. (NASDAQ:AEP) is an Ohio-based electric public utility holding company, specializing in the generation, transmission, and distribution of electricity for retail and wholesale customers in the United States. The company operates through Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing segments. American Electric Power Company, Inc. (NASDAQ:AEP) is one of the premier utility stocks to invest in, with a robust dividend profile.
On October 10, Credit Suisse analyst Nicholas Campanella reiterated an Outperform rating on American Electric Power Company, Inc. (NASDAQ:AEP) but slashed the price target on the shares to $95 from $105. Key updates from the firm’s NYC Analyst Day include trimmed 2022 EPS guidance, 2023 EPS guidance of $5.19-$5.39 per share, updated 2023-2027 five-year capital plan to $40 billion, and updated forecasted closing for unregulated contracted renewable sale in Q2 2023, among other positive news. On October 24, Guggenheim analyst Shahriar Pourreza also maintained a Buy rating on the stock but lowered the price target to $93 from $109.
According to Insider Monkey’s data, Jim Simons’ Renaissance Technologies held the leading position in American Electric Power Company, Inc. (NASDAQ:AEP), comprising more than 1 million shares worth $99 million.
Here is what ClearBridge Investments Value Equity has to say about American Electric Power Company, Inc. (NASDAQ:AEP) in its Q1 2022 investor letter:
“About 5% of the portfolio is in transitioning power companies, typically migrating from coal to renewables. We have been active in encouraging these transitions and added a new position in American Electric Power (NASDAQ:AEP). AEP has the fastest planned renewable energy ramp in the U.S., with plans to both shrink coal and grow renewables by 50% each by 2030. This would drive an 80% emissions reduction, while supporting high single-digit earnings growth at a double-digit return.”
3. WEC Energy Group, Inc. (NYSE:WEC)
Number of Hedge Fund Holders: 31
WEC Energy Group, Inc. (NYSE:WEC) was incorporated in 1981 and is headquartered in Milwaukee, Wisconsin. The company provides regulated natural gas and electricity, as well renewable and non-regulated renewable energy services in the United States. On October 20, WEC Energy Group, Inc. (NYSE:WEC) declared a $0.7275 per share quarterly dividend, in line with previous. The dividend is payable on December 1, to shareholders of record on November 14. The dividend yield on October 24 came in at 3.35%.
On October 20, KeyBanc analyst Sophie Karp reiterated an Overweight rating on WEC Energy Group, Inc. (NYSE:WEC) but trimmed the price target on the shares to $94 from $109 as utilities reversed 2022 outperformance in the last two weeks of Q3 2022. With higher rate expectations settling in, and significant underperformance in other cyclical sectors, the analyst thinks Utilities will largely become a source of funds moving forward.
According to Insider Monkey’s second quarter database, 31 hedge funds held stakes worth $618.5 million in WEC Energy Group, Inc. (NYSE:WEC), compared to 30 funds in the prior quarter worth $650.6 million.
Here is what ClearBridge Investments Dividend Strategy has to say about WEC Energy Group, Inc. (NYSE:WEC) in its Q3 2021 investor letter:
“In utilities we completed the exit of WEC Energy Group to fund our newer position in Sempra Energy. WEC is a solid, well-run utility but trades at a meaningful premium to the group despite similar long-term growth expectations.”
2. PG&E Corporation (NYSE:PCG)
Number of Hedge Fund Holders: 51
PG&E Corporation (NYSE:PCG) is a California-based company that delivers electricity and natural gas to customers in northern and central California. The company generates electricity using nuclear, hydroelectric, fossil fuel, fuel cell, and photovoltaic sources. PG&E Corporation (NYSE:PCG) is one of the elite utility stocks to monitor.
On October 7, RBC Capital analyst Shelby Tucker raised the price target on PG&E Corporation (NYSE:PCG) to $19 from $16 and maintained an Outperform rating on the shares. The analyst is “encouraged” by PG&E Corporation (NYSE:PCG)’s wildfire mitigation efforts and latest positive catalysts, such as the firm’s inclusion in the S&P 500.
According to Insider Monkey’s second quarter data, 51 hedge funds were long PG&E Corporation (NYSE:PCG), with collective stakes worth $2.6 billion, compared to 51 funds in the prior quarter worth $3.2 billion. Dan Loeb’s Third Point is the leading position holder in the company, with 65.40 million shares valued at $652.7 million.
Here is what Third Point specifically said about PG&E Corporation (NYSE:PCG) in its Q3 2022 investor letter:
“Since we wrote about PG&E Corporation (NYSE:PCG) in May, the Company has continued to close the valuation gap with its regulated peer group. Over the third quarter PCG’s stock rose 25% versus a 6% decline in the XLU (a proxy for the S&P 500 Utilities Sector). Outperformance was driven by the S&P 500 indexing announcement and continued execution by Patti Poppe, the recently hired CEO, and her team. Management has focused its efforts on mitigating physical and financial risk by building in layers of protection against catastrophic wildfires, financial uncertainty, and rate-payer volatility. Importantly for a utility company, Ms. Poppe has a plan to make much needed investments in safety, reliability, and service quality via capital investment while simultaneously reducing operating expenses.
Despite the recent move, we are optimistic about the Company’s prospects with industry leading 10% EPS growth and likely dividend reinstatement in 2023. PG&E, which currently trades at a 6x discount to peers on ’23 earnings, should continue to re-rate as investors become more familiar with the enhanced regulatory framework under AB1054 and build further confidence in management’s execution capabilities.”
1. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 59
NextEra Energy, Inc. (NYSE:NEE) is one of the best utility stocks to invest in. The company generates, transmits, and distributes electric power to retail and wholesale customers in North America, using wind, solar, nuclear, coal, and natural gas facilities. On October 14, NextEra Energy, Inc. (NYSE:NEE) declared a $0.425 per share quarterly dividend, in line with previous. The dividend is payable on December 15, to shareholders of record on November 25.
On October 24, Guggenheim analyst Shahriar Pourreza assigned a Buy rating to NextEra Energy, Inc. (NYSE:NEE) but lowered the firm’s price target on the shares to $99 from $108. The analyst is refreshing some estimates before the Q3 earnings season in the Power and Utilities group to account for “known and measurable year-over-year items”.
Among the hedge funds tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management featured as the leading position holder in NextEra Energy, Inc. (NYSE:NEE), with 16.2 million shares worth $1.26 billion. Overall, 59 hedge funds were long NextEra Energy, Inc. (NYSE:NEE) at the end of June 2022, compared to 64 funds in the last quarter.
In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and NextEra Energy, Inc. (NYSE:NEE) was one of them. Here is what the fund said:
“We increased our exposure to the energy transition during the quarter with new positions in Iberdrola (OTCPK:IBDSF), a Spanish-based integrated utility that is also one of the leading renewable energy developers in the world, and NextEra Energy, Inc. (NYSE:NEE), an integrated utility business with a regulated utility operating in Florida and the largest wind business in the U.S. The war has opened the eyes of the world that energy independence is critical. Renewables are for many countries the only way to get to the target. It is expected that existing renewable project pipelines will be executed faster, and more projects added to existing pipelines.
The energy transition would be extremely helpful for climate change and Iberdrola ranks well on our ESG matrix. NextEra, meanwhile, recently raised future earnings forecasts, citing a very favorable macro environment for rapid renewable generation expansion driven by decarbonization of the U.S. economy and the relative attractiveness of renewable generation in the context of high natural gas and power prices.”
You can also take a look at 13 Best Long-Term Dividend Stocks To Invest In and 11 Best High Beta Stocks To Buy Now.
