In this article, we discuss the 5 biggest electrical companies in the USA. To read the industry analysis, you can go directly to the 10 Biggest Electrical Companies in the USA.
5. CMS Energy Corporation (NASDAQ:CMS)
Number of Hedge Fund Holders: 36
CMS Energy Corporation (NASDAQ:CMS) is a Michigan-based company that provides regulated electric and natural gas supply to approximately 6 million customers in the state of Michigan. The company’s recent voluntary separation program allowed employees to retire early for upfront payment which led to a decrease in the company’s earnings in the third quarter. However, reducing the workforce in such a way could be beneficial in reducing expenses for the future.
CMS Energy Corporation (NASDAQ:CMS) saw a substantially positive sentiment from hedge funds in the third quarter of 2022. In Q3, 36 hedge funds had a stake in the company, valued at $814.588 million, compared to 22 hedge funds with a combined investment of $431.87 million in the previous quarter. In the third quarter, Zimmer Partners increased its holdings in the company by 140% to $232.546 million and was the most notable stakeholder in CMS Energy Corporation (NASDAQ:CMS).
4. FirstEnergy Corp. (NYSE:FE)
Number of Hedge Fund Holders: 41
FirstEnergy Corp. (NYSE:FE) is an Ohio-based electric-utility company that serves 6 million customers across Ohio, Pennsylvania, West Virginia, Virginia, Maryland, New Jersey, and New York.
On November 1, The New Jersey Board of Public Utilities announced that FirstEnergy Corp. (NYSE:FE) has been awarded the contract to direct clean energy created by the state’s offshore wind farms to the power grid. The company’s subsidiary Jersey Central Power & Light was awarded $723 million for the construction of new transmission infrastructure and for the upgradation of the existing one. This project allows FirstEnergy Corp. (NYSE:FE) to acquire around 20% stake in Mid-Atlantic Offshore Development.
As of November 21, FirstEnergy Corp. (NYSE:FE) has a dividend yield of 4.04% and a 62% payout ratio. The latest quarterly dividend amounts to $0.39 which is payable by December 1 to the shareholders of record on November 7.
Here is what ClearBridge Investments had to say about FirstEnergy Corp. (NYSE:FE) in its Q4 2021 investor letter:
“On a regional level, the Strategy’s largest exposure is in the U.S. and Canada (44%), consisting of regulated and contracted utilities (31%) and economically sensitive user-pays infrastructure (13%).
During the quarter we initiated new positions in U.S. electric utility FirstEnergy. With supply chain issues, higher housing costs, higher commodity prices and producer price inflation remaining square in the sights for 2022, we think higher inflation is a risk for global markets. We expect growth to slow to trend or below by mid-2022 and U.S.”
3. Exelon Corporation (NASDAQ:EXC)
Number of Hedge Fund Holders: 43
Exelon Corporation (NASDAQ:EXC) is an American electric power and natural gas company. In 2021, it was the largest electric parent company in the United States by revenue. The company also offers legal, human resources, information technology, financial, and supply management services.
In Q3, hedge funds were rushing to buy Exelon Corporation (NASDAQ:EXC) shares. According to the Insider Monkey database, 43 hedge funds brought the company into their portfolios, compared to just 32 in the previous quarter. GQG Partners remained the most significant shareholder of the company in Q3 with over $800 million worth of shares. On top of that, Citadel Investment Group increased its holdings in the company by 1562% to $130 million worth of shares and became the second largest shareholder in Exelon Corporation (NASDAQ:EXC).
On October 18, BMO Capital analyst James Thalacker reaffirmed an Outperform rating on Exelon Corporation (NASDAQ:EXC)’s shares and lowered the price target to $41 from $51. In addition, according to BofA Global Research, the company earnings can surge by 10% at the end of this year.
Here is what ClearBridge Investments had to say about Exelon Corporation (NASDAQ:EXC) in its Q1 2022 investor letter:
“U.S. electric utility Exelon (NASDAQ:EXC) was also a top contributor. Exelon is a pure transmission and distribution regulated utility business serving millions of electric and gas customers across Delaware, Illinois, Maryland, New Jersey, Pennsylvania and the District of Columbia. Shares outperformed along with the utilities sector; Exelon is also starting to be viewed as a premium name after its recently completed spin-off of power generation business Constellation Energy (NASDAQ:CEG).”
2. PG&E Corporation (NYSE:PCG)
Number of Hedge Fund Holders: 46
PG&E Corporation (NYSE:PCG) is a California-based company that provides electricity and gas in northern and central California. In Q3 2022, 46 hedge funds were bullish on the stock with Dan Loeb’s Third Point as the most significant stakeholder. The firm owned 63.4 million PG&E Corporation (NYSE:PCG)’s shares worth $792.5 million.
On October 28, Citi analyst Ryan Levine maintained a Buy rating on PG&E Corporation (NYSE:PCG) and raised the stock price target to $19 from $14. Despite the utility sector experiencing a battering in the last month, the company is up 23% on a year-to-date basis as of November 18.
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: 73
NextEra Energy, Inc. (NYSE:NEE) is an American electric power generation company. It operates in 38 US states and 4 provinces in Canada. Guggenheim analyst Shahriar Pourreza considered the company stock a Buy and on October 24.
One of NextEra Energy, Inc. (NYSE:NEE)’s major growth prospects is its heavy use of clean energy. 95% of the company’s electrical production is through clean energy sources such as wind, solar, natural gas, and nuclear.
Here is what ClearBridge Investments said about NextEra Energy, Inc. (NYSE:NEE) in its Q2 2022 letter.
“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 the 11 Best Wind Power and Solar Stocks To Buy and 15 Biggest Microchip Companies in the World.
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