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), an exchange-traded fund, have underperformed the broader market over the past year. XLU has provided a total return of 12.7% over the past 12 months, compared with the Russell 1000 Index’s total return of 15.0%. These market performance numbers and all statistics in the tables below are as of Jan. 20, 2022.
Here are the top three utilities stocks with the best value, fastest growth, and 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 that you’re paying less for each dollar of profit generated.
|Best Value Utilities Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|NRG Energy Inc. (NRG)||38.53||9.4||3.9|
|UGI Corp. (UGI)||45.71||9.6||6.6|
|Pinnacle West Capital Corp. (PNW)||70.99||8.0||14.0|
- NRG Energy Inc.: NRG Energy owns and operates power-generating facilities, primarily in the United States. The company provides energy production, cogeneration facilities, thermal energy production, and resource recovery facilities and services. On Jan. 21, the company announced a quarterly dividend of $0.35 per common share. The dividend is payable on Feb. 15 to shareholders of record as of Feb. 1, 2022.
- UGI Corp.: UGI is a domestic and international distributor of energy products and services. It offers propane, natural gas, and electricity. In early January, UGI announced that it had entered into a 15-year agreement with California-based technology developer Vertimass to utilize their catalytic technology to produce renewable fuels from renewable ethanol in the U.S. and Europe. UGI plans to invest in building and operating multiple production facilities with a total production target of approximately 1 billion gallons of combined renewable fuels per year as a result of the partnership. Financial terms of the deal were not disclosed.
- Pinnacle West Capital Corp.: Pinnacle West Capital is a utility holding company. It offers retail and wholesale electric services throughout the state of Arizona and is also involved in real estate development.
These are the top utilities stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.
|Fastest-Growing Utilities Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|NRG Energy Inc. (NRG)||38.53||9.4||547.1||135.3|
|CenterPoint Energy Inc. (CNP)||27.21||17.1||146.2||7.8|
|Exelon Corp. (EXC)||56.98||55.7||141.2||0.6|
- NRG Energy Inc.: See company description above.
- CenterPoint Energy Inc.: CenterPoint Energy is a public utility holding company. Through subsidiaries, CenterPoint provides electricity transmission and distribution, interstate pipeline operations, natural gas distribution, and power generation, and other services. For Q3 2021, ended Sept. 30, CenterPoint reported that net income available to common shareholders nearly tripled YOY on modest sales increases. The company achieved earnings growth in spite of one-time costs for the quarter related to board-implemented governance changes and unfavorable weather and usage.
- Exelon Corp.: Exelon is a utility services holding company. It distributes electricity to customers in Illinois and Pennsylvania through subsidiaries, distributes gas in the Philadelphia area, and operates nuclear power plants in several states. In mid-December, Exelon received approval from the New York State Public Service Commission to move forward with its plan to separate into two companies, Exelon and Constellation, in Q1 2022. Upon completion, Exelon will operate a transmission and distribution utility business. The new company, Constellation, will become the nation’s largest provider of clean energy.
These are the utilities stocks that had the highest total return over the past 12 months.
|Utilities Stocks With the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|FirstEnergy Corp. (FE)||41.43||23.6||38.0|
|Exelon Corp. (EXC)||56.98||55.7||36.8|
|CenterPoint Energy Inc. (CNP)||27.21||17.1||30.1|
|Utilities Select Sector SPDR ETF (XLU)||N/A||N/A||12.7|
- FirstEnergy Corp.: FirstEnergy is a public utility holding company that generates, transmits, and distributes electricity through subsidiaries. The company also provides natural gas, energy management, and related services.
- Exelon Corp.: See company description above.
- CenterPoint Energy Inc.: See company description above.
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