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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 -2.3% over the past 12 months, well below the Russell 1000’s total return of 18.1%, as of January 18, 2021. All statistics in the tables below are as of January 19.
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.
Source: YCharts
- 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. On January 5, the company completed its acquisition of Direct Energy from Centrica plc. The acquisition, which adds more than 3 million customers across North America to NRG’s customer base, was first announced in July 2020 with a transaction value of $3.6 billion.
- Sempra Energy: Sempra is an energy services holding company that, through its subsidiaries, generates electricity, delivers natural gas, operates natural gas pipelines and storage facilities, and operates a wind power generation project. In December, the company announced that ECA Liquefaction, its joint venture with Infraestructura Energética Nova, S.A.B. de C.V. had extended its equity investment agreement with Total SE (TOT) through a liquefied natural gas export project in Mexico.
- Vistra Corp.: Vistra operates an integrated retail and generation business. It provides electricity generation, wholesale energy sales and purchases, commodity risk management, and retail sales of electricity.
Fastest Growing Utilities Stocks
These are the utilities stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
Source: YCharts
- Vistra Corp.: See above for company description.
- Public Service Enterprise Group Inc.: Public Service Enterprise Group is a gas and electric utility company that provides services to customers in New Jersey. On January 19, the company announced that it had launched its first Environmental, Social, and Governance (ESG) report on metrics and performance. The ESG report is part of its ongoing efforts to increase transparency and disclosures. Among other goals, the company set new vehicle electrification and waste reduction benchmarks.
- Entergy Corp.: Entergy is an integrated energy company engaged in electric power production and retail electric distribution operations.
Utilities Stocks with the Most Momentum
These are the utilities stocks that had the highest total return over the last 12 months.
| Utilities Stocks with the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| The AES Corp. (AES) | 27.60 | 18.4 | 39.6 |
| NextEra Energy Inc. (NEE) | 82.04 | 160.7 | 33.1 |
| American Water Works Co. Inc. (AWK) | 159.72 | 29.0 | 27.9 |
| Russell 1000 | N/A | N/A | 18.1 |
| Utilities Select Sector SPDR ETF (XLU) | N/A | N/A | -2.3 |
Source: YCharts
- 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.
- 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.
- American Water Works Co. Inc.: American Water Works is a holding company that provides water, wastewater, and other water-related services. In December, the company announced a quarterly cash dividend of $0.55 per share of common stock, payable on March 2, 2021 to all shareholders of record as of February 8, 2021.
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