7 Most Undervalued Utility Stocks To Buy According To Analysts

5. Xcel Energy (NASDAQ:XEL)

Upside Potential: 6.60%

Forward P/E Ratio as of October 7: 17.68

Number of Hedge Fund Investors: 29  

Xcel Energy (NASDAQ:XEL) is a major U.S. utility company providing electricity and natural gas services across several states, including Minnesota, Colorado, and Texas. Xcel Energy (NASDAQ:XEL) is recognized as a leader in renewable energy, particularly wind and solar power.

Xcel Energy (NASDAQ:XEL)  is a dividend growth stock that is currently undervalued, with a strong growth outlook, a stable balance sheet, and a secure dividend. The company’s ongoing diluted EPS is projected to grow by 6% in 2024, with further growth anticipated through 2026. Xcel Energy (NASDAQ:XEL) is expected to generate a 9.1% compound annual growth rate in data center sales from 2024 to 2026.

The company’s balance sheet is investment-grade, with a debt-to-capital ratio in the high 50% range, which is around the 60% debt-to-capital ratio that rating agencies desire from the industry. Xcel Energy’s (NASDAQ:XEL) valuation is attractive, with a current-year P/E ratio of 17.68. The company’s dividend is secure, with a low payout ratio and a 21-year growth streak. The dividend is expected to grow at a rate of 5.9% annually, which is above the sector median forecast of 5.3%.

Analysts forecast the company to report 4.6% earnings growth for this year and have a consensus on the stock’s Buy rating, with an average target price of $67.23 that suggests a 6.60% upside potential from its current levels.