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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. XLU has provided a total return of 14.7% over the past 12 months, less than one third of the Russell 1000’s total return of 52.2%, as of April 16. All statistics in the tables below are also as of April 16.
Here are the top 3 utilities stocks with the best value, the fastest growth, and the most momentum.
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
- Sempra Energy: Sempra is an energy services holding company that generates electricity, delivers natural gas, and operates natural gas pipelines. It also operates a wind power generation project. On April 5, Sempra announced that it had entered into a definitive agreement to sell a 20%, non-controlling interest in its new business platform, Sempra Infrastructure Partners, to global investment firm KKR & Co. Inc (KKR) for $3.37 billion in cash.
- Vistra Corp.: Vistra operates an integrated retail and power generation business. It sells electricity and natural gas to residential, commercial and industrial customers, and also is involved in electricity generation, wholesale energy sales and purchases, and commodity risk management. The company announced on April 6 that it would close the Joppa Power Plant by Sept. 1, 2022, three years earlier than originally disclosed. The closure of the plant, which uses primarily coal, is part of an agreement reached to settle a complaint brought by the Sierra Club in 2018 before the Illinois Pollution Control Board. Vistra also said the move is part of the company’s plan to invest over $550 million across central and southern Illinois to build zero-emission renewable energy centers at several of its plant sites.
- UGI Corp.: UGI is a domestic and international distributor of energy products and services. It offers propane, natural gas, and electricity. UGI announced on April 12 that president and CEO John Walsh will retire June 25, 2021. Walsh will be replaced in both positions by Roger Perreault, executive vice president, Global LPG, and president of UGI International, LLC. Walsh will remain on the UGI board of directors.
Fastest Growing Utilities Stocks
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 year over year (YOY) percentage revenue growth and their 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 or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
Source: YCharts
- Essential Utilities Inc..: Essential Utilities is a regulated utility holding company that provides water, wastewater, and natural gas services to about 5 million customers in eastern, midwestern and southern states, including Pennsylvania, Ohio, Texas, Illinois, New Jersey, and Virginia under the Aqua and Peoples brands. On April 14, the company’s board declared a quarterly cash dividend of $0.2507 per share, payable June 1, 2021 to all shareholders as of May 14.
- Edison International.: Edison International is the parent holding company of SCE, a public utility that supplies and delivers electricity to customers in southern California. Another business, Edison Energy Group, provides services to commercial, institutional and industrial customers.
- American Electric Power Company Inc.: American Electric Power Company is a public utility holding company that provides service to customers in midwestern and southern U.S. states such as Indiana, Kentucky, Michigan, Ohio, and Texas. The company’s 199-megawatt Sundance Wind Energy Center in north central Oklahoma began commercial operation on April 14, 2021. The center is one of three wind projects making up North Central Energy Facilities, which will provide 1,485 MW of power to AEP customers.
These are the utilities stocks that had the highest total return over the last 12 months.
Source: YCharts
- The AES Corp.: AES is a utility company that operates a diversified portfolio of electricity generation and distribution businesses.
- UGI Corp.: See company description above.
- CenterPoint Energy Inc.: CenterPoint Energy is a public utility holding company that owns and operates electric transmission and distribution, power generation, and natural gas distribution facilities. It serves more millions of customers in states including Arkansas, Indiana, Louisiana, Ohio, Oklahoma, and Texas.
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