7 Cheap Utility Stocks to Buy According to Hedge Funds

5. American Electric Power Company, Inc. (NASDAQ:AEP)

Forward P/E as of September 27: 16.97

Earnings Growth this year: 7.00%

Number of Hedge Fund Holders: 35

American Electric Power Company, Inc. (NASDAQ:AEP) is a diversified utility that serves over 5 million customers across 11 states, delivering electricity through an extensive network of power plants, transmission, and distribution lines. The company generates power from a mix of renewable and traditional energy sources.

In the second quarter, American Electric Power Company, Inc. (NASDAQ:AEP) reported operating earnings of $1.25 per share, up $0.12 from the previous year. The company reaffirmed its full-year operating earnings guidance, targeting a range of $5.53 to $5.73 per share, and expects a long-term earnings growth rate of 6% to 7%. Commercial load increased by 12.4% year-over-year, driven by a 20%+ rise at its Transmission & Distribution companies as new data processing centers came online. Additionally, AEP has secured customer commitments for over 15 gigawatts of additional load by the end of the decade.

BMO Capital Markets recently raised AEP’s price target to $109, maintaining an Outperform rating. This follows the company’s consideration of selling a minority stake in its transmission companies, a move that could impact the company’s earnings per share and credit metrics.

As of the end of Q2 2024, 35 hedge funds held positions in AEP, up from 28 in the previous quarter, with total stakes valued at $1.6 billion, according to Insider Monkey. GQG Partners held the largest position in the company during the quarter.