5 Cheap Utility Stocks to Buy According to Analysts

In this article, we discuss 5 cheap utility stocks to buy according to analysts. If you want to see more stocks in this selection, check out 12 Cheap Utility Stocks to Buy According to Analysts. 

5. DTE Energy Company (NYSE:DTE)

Number of Hedge Fund Holders: 34

Average Upside Potential Based on Analyst Ratings: 13.66% 

Average Price Target: $127.50

DTE Energy Company (NYSE:DTE) engages in the utility operations, operating through Electric, Gas, DTE Vantage, and Energy Trading segments. It is one of the best cheap utility stocks to invest in. On February 2, DTE Energy Company (NYSE:DTE) declared a $0.9525 per share quarterly dividend, in line with previous. The dividend is payable on April 15, to shareholders of record on March 20. 

On December 14, Neil Kalton, an analyst at Wells Fargo, increased the firm’s price target for DTE Energy Company (NYSE:DTE) from $128 to $138, to account for the rise in peer group multiples since his last assessment. Kalton maintained an Overweight rating on the shares, but his sector outlook for 2023 was less optimistic, though not negative.

According to Insider Monkey’s fourth quarter database, 34 hedge funds were bullish on DTE Energy Company (NYSE:DTE), compared to 30 funds in the prior quarter. Ken Griffin’s Citadel Investment Group held the biggest stakeholder of the company, with 1.7 million shares worth approximately $202 million. 

4. Enel Chile S.A. (NYSE:ENIC)

Number of Hedge Fund Holders: 7

Average Upside Potential Based on Analyst Ratings: 14.81%

Average Price Target: $2.68

Enel Chile S.A. (NYSE:ENIC) provides electricity services, including the production, transmission, and distribution of electricity in Chile. Enel Chile S.A. (NYSE:ENIC) generates electricity from various sources, including hydroelectric, thermal, wind, solar, and geothermal power plants. It is one of the best cheap utility stocks to buy according to analysts. On March 1, Enel Chile S.A. (NYSE:ENIC) reported an adjusted EBITDA of $932 million. 

According to Insider Monkey’s fourth quarter database, 7 hedge funds held stakes worth $13.75 million in Enel Chile S.A. (NYSE:ENIC), compared to 5 funds in the prior quarter worth $7.6 million. Cliff Asness’ AQR Capital Management is the biggest stakeholder of the company, with 2.28 million shares worth over $5 million. 

3. Clearway Energy, Inc. (NYSE:CWEN)

Number of Hedge Fund Holders: 27

Average Upside Potential Based on Analyst Ratings: 17.04%

Average Price Target: $37.86

Clearway Energy, Inc. (NYSE:CWEN) operates in the renewable energy business in the United States. The company operates through Conventional, Renewables, and Thermal segments. On February 16, Clearway Energy, Inc. (NYSE:CWEN) declared a $0.3745 per share quarterly dividend, a 2% increase from its prior dividend of $0.3672. The dividend was paid to shareholders on March 15. 

On January 10, Mark Jarvi, an analyst at CIBC, upgraded Clearway Energy, Inc. (NYSE:CWEN) from Neutral to Outperform. He noted that there was a significant variance in individual performance within the Power & Utility sector in 2022, which was a challenging year. The analyst believes that the same factors will drive outperformance this year, particularly given the uncertain macro and equity market outlook in 2023. In this context, the analyst prefers companies that can balance defensive underpinnings with measurable growth.

According to Insider Monkey’s fourth quarter database, 27 hedge funds were long Clearway Energy, Inc. (NYSE:CWEN), compared to 25 funds in the earlier quarter. Jos Shaver’s Electron Capital Partners is the largest stakeholder of the company, with 846,571 shares worth nearly $27 million. 

Here is what ClearBridge Investments SMID Cap Growth Strategy has to say about Clearway Energy, Inc. (NYSE:CWEN) in its Q4 2021 investor letter:

“Clearway Energy primarily owns and operates contracted renewable generation assets. It also owns and operates conventional generation and thermal infrastructure assets. Clearway Energy’s share price continued to benefit from the completed sale of its thermal assets, which was above expectations, generating USD$1.3 billion in incremental proceeds. Additionally, there was optimism surrounding a stimulus bill passthrough which contains renewables subsidies.”

2. NRG Energy, Inc. (NYSE:NRG)

Number of Hedge Fund Holders: 39

Average Upside Potential Based on Analyst Ratings: 17.38%

Average Price Target: $38.29

NRG Energy, Inc. (NYSE:NRG) is an integrated power company in the United States. It operates through Texas, East, and West segments. On March 2, NRG Energy, Inc. (NYSE:NRG) set the price for its offering of $740 million, 7.000% senior secured first lien notes due 2033 at 98.749% of their face value. In addition, the company has priced 650,000 shares of 10.25% series A fixed-rate reset cumulative redeemable perpetual preferred stock, with a $1,000 liquidation preference per share. The notes will reach maturity on March 15, 2033. NRG Energy, Inc. (NYSE:NRG) plans to use the net proceeds from these offerings to partially finance its previously announced acquisition of Vivint Smart Home.

On March 20, Julien Dumoulin-Smith, an analyst at Bank of America, upgraded NRG Energy, Inc. (NYSE:NRG) from Neutral to Buy with a price target of $36, up from $35. The company’s stock recently fell to a low not seen since November 2020 and is currently trading lower than it did immediately after the acquisition of Vivint. According to the firm, investors have failed to recognize the earnings potential of NRG Energy, Inc. (NYSE:NRG)’s nuclear and Texas-based retail business. The firm predicts that this business will generate approximately $1.4 billion in adjusted EBITDA by 2025 and noted that it is similar to peer Vistra’s “Vision” business, which is also a nuclear, gas, and retail powerhouse.

According to Insider Monkey’s fourth quarter database, 39 hedge funds were long NRG Energy, Inc. (NYSE:NRG), up from 27 funds in the earlier quarter. Richard S. Pzena’s Pzena Investment Management is the largest stakeholder of the company, with 8.35 million shares worth $265.7 million. 

Legacy Ridge Capital made the following comment about NRG Energy, Inc. (NYSE:NRG) in its Q4 2022 investor letter:

“NRG Energy, Inc. (NYSE:NRG) was covered in the 2019 letter with VST. We sold the shares as COVID induced volatility presented better risk/reward opportunities, but never subsequently repurchased shares—as we did with VST. Not only do we think VST is a better value, but the management team at NRG appears to have gone astray. Despite coming to his position during an activist campaign by Elliott Management in 2017, when the prior empire-building CEO was shown the door, the replacement CEO has seemingly embarked on the same failed strategy. In early December they announced the purchase of Vivint Smart Home, a smart home platform company, for $2.8 billion. The transaction diversifies NRG’s business, increases leverage, dramatically reduces intermediate-term shareholder capital returns, and most importantly, is the opposite of what management told us they were going to do when they assumed the role in 2017. The stock fell 15% on the day of the announcement and is down another 5% since then, and now 10% lower than when we first wrote about it. We like the generation business at NRG and the valuation is almost back to interesting, but we’d probably have to see turnover in the C-suite and a refreshed corporate strategy to reignite our enthusiasm.”

1. NextEra Energy Partners, LP (NYSE:NEP)

Number of Hedge Fund Holders: 30

Average Upside Potential Based on Analyst Ratings: 44.86%

Average Price Target: $84.31

NextEra Energy Partners, LP (NYSE:NEP) purchases, possesses, and handles clean energy projects under contract in the United States. Its portfolio comprises contracted renewable energy generation assets, including wind, solar, and battery storage projects, as well as contracted natural gas pipeline assets. The company was established in 2014 and is headquartered in Juno Beach, Florida. NextEra Energy Partners, LP (NYSE:NEP) is one of the top cheap utility stocks to buy according to analysts. 

On January 26, Oppenheimer’s analyst, Colin Rusch, increased the company’s price target on NextEra Energy Partners, LP (NYSE:NEP) from $88 to $94 and maintained an Outperform rating on the shares. The firm reported Q4 results below consensus estimates due to reduced wind production YoY and increased PTC allocations. However, it affirmed the run-rate expectations for 2023 and extended its 12%-15% DPS CAGR target until 2026. Oppenheimer believes that NextEra Energy Partners, LP (NYSE:NEP) is well-placed, given the company’s efficient management of the cost of capital.

According to Insider Monkey’s fourth quarter database, 30 hedge funds were bullish on NextEra Energy Partners, LP (NYSE:NEP), compared to 21 funds in the prior quarter. 

ClearBridge Investments mentioned NextEra Energy Partners, LP (NYSE:NEP) in its first quarter 2021 investor letter: 

“NEP is a growth-oriented contracted renewables company formed by its sponsor and general partner NextEra Energy (NEE) to own, operate and acquire contracted renewable energy generation assets located in North America. Growth comes from the dropdown of assets from NEE and we anticipate this should allow NEP to provide 12%–15% dividend growth to 2024. Shares were higher amid an improved renewables project backlog following fourth-quarter results. Continued positive green policy news following the Democrats’ runoff election wins also raised expectations of green fiscal stimulus.”

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