The utilities sector is made up of companies that provide electricity, natural gas, water, sewage, and other services to homes and businesses. Many of these companies are heavily regulated. They include major utilities companies such as Dominion Energy Inc. (D), Duke Energy Corp. (DUK), and Xcel Energy Inc. (XEL). Utilities stocks, as represented by the Utilities Select Sector SPDR ETF (XLU), have significantly underperformed the broader market over the past year. The XLU has provided a total return of -0.2% over the past 12 months, well below the Russell 1000’s total return of 21.2%, as of December 18, 2020. All statistics in the tables below are as of December 21.
Here are the top 3 utilities stocks with the best value, the fastest growth, and the most momentum.
Best Value Utilities Stocks
These are the utilities stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
|Best Value Utilities Stocks|
|Market Cap ($B)||12-Month Trailing P/E Ratio|
|NRG Energy Inc. (NRG)||33.79||8.3||2.2|
|Vistra Corp. (VST)||17.65||8.6||9.9|
|Sempra Energy (SRE)||130.70||37.7||10.1|
- NRG Energy Inc.: NRG Energy is an integrated power company that produces, sells, and distributes energy and energy services. The company provides energy production and cogeneration facilities, thermal energy production, and energy resource facilities. NRG Energy announced at the end of November that the Federal Energy Regulatory Commission (FERC) had approved its previously announced acquisition of Direct Energy from Centrica PLC. The transaction is expected to close in early January 2021. The acquisition was first announced on July 24 with a transaction value of $3.625 billion.
- Vistra Corp.: Vistra operates an integrated retail and generation business. It provides electricity generation, wholesale energy sales and purchases, commodity risk management, and retail sales of electricity. The company announced in early December the appointment of Jim Burke as chief financial officer (CFO). Mr. Burke most recently served as executive vice president and chief operating officer (COO). He replaces David Campbell, who will be leaving to join Evergy Inc. (EVRG).
- Sempra Energy: Sempra is an energy services holding company that, through its subsidiaries, generates electricity, delivers natural gas, operates natural gas pipelines and storage facilities, and operates a wind power generation project.
Fastest Growing Utilities Stocks
These are the utilities stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
|Fastest Growing Utilities Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)|
|Vistra Corp. (VST)||17.65||8.6||291.3|
|Public Service Enterprise Group Inc. (PEG)||56.82||28.7||44.3|
|Entergy Corp. (ETR)||100.02||20.0||42.3|
- Vistra Corp.: See above for company description.
- Public Service Enterprise Group Inc.: Public Service Enterprise Group is a gas and electric utility company that provides services to customers in New Jersey.
- Entergy Corp.: Entergy is an integrated energy company engaged in electric power production and retail electric distribution operations. The company announced at the end of November that its subsidiary, Entergy Louisiana LLC, had completed the acquisition of the Washington Parish Energy Center, an approximately 361-megawatt facility, for about $261 million.
Utilities Stocks with the Most Momentum
These are the utilities stocks that had the highest total return over the last 12 months.
|Utilities Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|NextEra Energy Inc. (NEE)||74.51||146.0||26.6|
|American Water Works Co. Inc. (AWK)||150.24||27.2||25.9|
|The AES Corp. (AES)||22.54||15.0||21.7|
|Utilities Select Sector SPDR ETF (XLU)||N/A||N/A||-0.2|
- NextEra Energy Inc.: NextEra is an electric power and energy infrastructure company that generates electricity through wind, solar, and natural gas. Through its subsidiaries, the company also operates multiple commercial nuclear power units. NextEra announced in early December that its subsidiary, NextEra Energy Resources LLC, had acquired eIQ Mobility, a software provider of mobility planning solutions. The company said that the acquisition will enable it to provide its customers with robust fleet assessments to improve infrastructure planning for renewable energy, load management and resiliency. The value of the transaction was not disclosed in the press release.
- American Water Works Co. Inc.: American Water Works is a holding company that provides water, wastewater, and other water-related services.
- The AES Corp.: AES is a power generation and utility company that, through its subsidiaries, operates a diversified portfolio of electricity generation and distribution businesses.