We recently compiled a list of the 10 Best Performing S&P 500 Stocks So Far in 2025. In this article, we are going to take a look at where Constellation Energy Corporation (NASDAQ:CEG) stands against the other stocks.
Emily Rowland, co-chief investment strategist at John Hancock Investment Management, joined a discussion on CNBC’s ‘Squawk Box’ on February 13 to share her insights on the markets and the upcoming PPI (Producer Price Index) report. She thinks that the S&P earnings are highly underappreciated right now. She noted that the market’s reaction to inflation data has been asymmetric. While higher inflation numbers are often shrugged off, any relief from softer inflation prints tends to cause bigger moves in the markets. This was evident in the response to the CPI (Consumer Price Index) report. Regarding market performance, Rowland highlighted that the S&P 500 earnings were coming in with strong growth (16% year-over-year for the fourth quarter) and this growth is broad-based across sectors like healthcare and utilities. Financials also showed significant gains with a 50% increase.
On discussing President Trump’s announcement of retaliatory tariffs via Truth Social, Rowland said that her team avoids making tactical investment decisions based on political outcomes due to their unpredictability and rapid changes. In terms of attractive sectors for investment within US markets, she highlighted healthcare and industrial companies as promising areas due to their strong fundamentals and potential benefits from ongoing supply chain reshoring activities within the US. While acknowledging political factors can influence sector performance, her strategy focuses on longer-term economic trends rather than short-term political developments when considering investments in key indices like those represented by major US equities such as those found in the S&P 500 index.
Methodology
We first sifted through the Finviz stock screener to compile a list of the best-performing S&P 500 stocks. We then picked the top 10 stocks with the highest year-to-date performance, as of February 17. The stocks are ranked in ascending order of their year-to-date performance. We’ve also added the hedge fund sentiment for each stock which was sourced from Insider Monkey’s database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close up of a wind turbine producing electricity as the sun sets.
Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 78
Year-to-Date Performance as of February 17: 41.84%
Constellation Energy Corporation (NASDAQ:CEG) generates and sells electricity in the US. Operating across five regions, it provides natural gas, energy-related products, and sustainable solutions. With ~33,094 megawatts of generating capacity from nuclear, wind, solar, natural gas, and hydroelectric sources, it serves diverse customers, which include utilities, municipalities, and businesses.
The company’s nuclear production Q3 nuclear production exceeded 41 million megawatt-hours of carbon-free electricity at a 95% capacity factor in Q3 2024, with exceptionally efficient refueling outages averaging under 18 days. It has the potential for at least 1,000 more megawatts via uprates and is seeing surging demand from data centers and large customers for its 24/7 clean power. This leads to the active pursuit of colocation and grid sales with long-term fixed-price contracts.
Constellation Energy Corporation (NASDAQ:CEG)’s planned acquisition of Calpine for $16.4 billion has boosted investor confidence. This will make it the largest independent power provider in the US and increase its natural gas-fired electricity generation capacity. The Calpine acquisition is a strategic move to capitalize on the growing electricity demand driven by AI and data centers.
As January ended, BofA lowered the company’s price target to $366 from $380 while maintaining a Buy rating. The stock declined due to market overreaction to DeepSeek’s more efficient AI models. BofA believes data center demand will remain strong near term, though potentially less so long-term, and efficiency gains may come sooner than expected.
Alger Mid Cap Focus Fund is bullish on Constellation Energy Corporation (NASDAQ:CEG) due to its leadership in clean energy. This is because the company benefits from increasing electrification and AI demand, and positive developments like rising electricity prices and the Microsoft agreement. Here’s what the fund said in its Q3 2024 investor letter:
“Constellation Energy Corporation (NASDAQ:CEG) is the largest producer of clean energy in the U.S., with 32,400 Megawatts of capacity, 87% of which is nuclear generated. Its nuclear, hydro, wind, and solar facilities provide 10% of all clean energy on the U.S. grid and 22% of its clean baseload power. We believe the company stands to benefit from the increasing electrification of the U.S. economy. The rise of electric vehicles, data centers, and reshoring of American manufacturing is driving U.S. electricity load growth for the first time in nearly two decades. In our view, AI workloads are projected to significantly increase energy demand from data centers over the next few years. As American enterprises seek clean and reliable energy sources, nuclear power, which is carbon-free and dependable, stands out compared to intermittent renewables like wind and solar. Constellation, as an unregulated independent power producer, benefits from low fixed costs and can capture upside from rising electricity prices. We believe that potential opportunities for earnings growth include colocation (data centers near nuclear plants) and energy-matching programs with cloud providers willing to pay premium prices for nuclear energy. The Inflation Reduction Act also provides downside protection through a guaranteed minimum price for nuclear generation. During the quarter, shares contributed to performance from two events: 1) annual electricity auctions revealed tightening markets driven by increasing demand, driving higher pricing in the Middle Atlantic states, leading management to raise their fiscal 2024 earnings projections. 2) On September 20, 2024, Constellation Energy announced the signing of a 20-year power purchase agreement with Microsoft, which includes restarting Three Mile Island’s Unit 1 to supply energy.”
Overall CEG ranks 4th on our list of the best performing S&P 500 stocks so far in 2025. While we acknowledge the potential of CEG as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CEG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
