The utility sector has been in the limelight on Wall Street as the energy transition away from fossil fuels and towards cleaner energy sources dominates new spending in the sector. Even though utilities have historically been shielded from pricing pressures, the conditions created by surging energy costs, geopolitical conflicts in Ukraine and Israel, and supply chain issues have all impacted the industry. Clean energy remains the key theme, however, with estimates suggesting clean power will generate over 33% of all US power within the next two years.
Some of the key firms to monitor in this context include Duke Energy Corporation (NYSE:DUK), Consolidated Edison, Inc. (NYSE:ED), and American Electric Power Company, Inc. (NASDAQ:AEP). These firms are spending billions in an effort to move towards wind, nuclear, solar, and other clean sources of energy creation. By the end of this decade, corporate demand for clean energy is likely to add more than 94 GW of renewable energy capacity to the electricity grid in the United States.
In this exciting era of change, utility stocks offer investors a mix of growth and value. Traditionally, utility firms are value kings with reliable dividend payouts and steady share prices. However, the pivot away from fossil fuels adds a factor of growth to these firms that had been missing before. This has also led to activist investor interest in the sector. Even the US government is exploring options to put money into the utilities business that has suffered from historic underinvestment.
Lynn Good, the CEO of Duke Energy Corporation (NYSE:DUK), recently underlined during the third quarter earnings call that her company was investing in modernizing the electrical grid to protect it against hazardous weather conditions. She also noted how annual rate updates were important to efficiently recover investments. Good identified renewables, battery storage, natural gas, and energy efficiency and demand side management as some of the resources Duke was using to meet the evolving power needs of customers.
“Our response to Hurricane Idalia in September, yet again demonstrated the value of our grid-hardening investments. The storm caused over 200,000 outages, and we restored power to 95% of customers within 36 hours. Further, our investment in self-healing grid technologies saved more than 7 million outage minutes for customers. Shifting to the Midwest, in October, the Kentucky Public Service Commission approved the new rates in our electric rate case, which utilized a forecasted test year. And the commission approved a 9.75% ROE, a 50 basis point increase from the previous case as well as increasing the equity component of the capital structure to 52%. Across our footprint, we've built considerable momentum over the last year, and our long-term organic growth strategy has never been more clear.
This past year has made our company stronger and more agile as we've responded to macroeconomic headwinds. I'm confident we're well positioned to deliver sustainable value and 5% to 7% earnings growth over the next five years.”
Our Methodology
To select stocks for this list, we scoured the top stock picks in the utility world as recommended by prominent financial websites. The websites consulted for this purpose include Forbes, The Motley Fool, Business Insider, Morningstar, Kiplinger, The Street, and Investopedia. Only articles from 2023 were considered. The top twelve consensus picks were then selected. The analyst ratings of each stock are also discussed to provide readers with some context for their investment choices. The hedge fund sentiment around each stock was calculated using the data of around 900 hedge funds tracked by Insider Monkey in the third quarter of 2023. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
12 Best Utility Stocks to Buy According to Financial Media
A close-up of an electrical power line with a bright blue sky in the background, highlighting the company's selection of electricity and natural gas services.
Best Utility Stocks to Buy According to Financial Media
Number of Times Stock Appeared in Top Picks of Financial Media: 1
NorthWestern Corporation (NASDAQ:NWE) provides electricity and natural gas to residential, commercial, and industrial customers. On October 30, investment advisory Wells Fargo upgraded NorthWestern Corporation (NASDAQ:NWE) stock to Overweight from Equal Weight and lowered the price target to $51 from $59.
At the end of the third quarter of 2023, 13 hedge funds in the database of Insider Monkey held stakes worth $48 million in NorthWestern Corporation (NASDAQ:NWE), compared to 14 in the previous quarter worth $107 million.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm AQR Capital Management is a leading shareholder in NorthWestern Corporation (NASDAQ:NWE) with 331,642 shares worth more than $15 million.
Just like Duke Energy Corporation (NYSE:DUK), Consolidated Edison, Inc. (NYSE:ED), and American Electric Power Company, Inc. (NASDAQ:AEP), NorthWestern Corporation (NASDAQ:NWE) is one of the best utility stocks to buy according to financial media.
Number of Times Stock Appeared in Top Picks of Financial Media: 1
Portland General Electric Company (NYSE:POR) is an integrated electric utility company. On December 11, investment advisory Barclays upgraded Portland General Electric Company (NYSE:POR) stock to Overweight from Equal Weight and raised the price target to $47 from $44.
At the end of the third quarter of 2023, 21 hedge funds in the database of Insider Monkey held stakes worth $184 million in Portland General Electric Company (NYSE:POR), up from 19 in the previous quarter worth $267 million.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Zimmer Partners is a leading shareholder in Portland General Electric Company (NYSE:POR) with 1.7 million shares worth more than $71 million.
Number of Times Stock Appeared in Top Picks of Financial Media: 2
Pinnacle West Capital Corporation (NYSE:PNW) provides retail and wholesale electric services. On October 24, investment advisory Bank of America maintained a Neutral rating on Pinnacle West Capital Corporation (NYSE:PNW) stock and raised the price target to $73 from $69.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Pinnacle West Capital Corporation (NYSE:PNW) with 901,311 shares worth more than $66 million.
At the end of the third quarter of 2023, 20 hedge funds in the database of Insider Monkey held stakes worth $257 million in Pinnacle West Capital Corporation (NYSE:PNW), the same as in the previous quarter worth $289 million.
Number of Times Stock Appeared in Top Picks of Financial Media: 2
New Jersey Resources Corporation (NYSE:NJR) operates as an energy services holding firm. On November 20, investment advisory Mizuho maintained a Neutral rating on New Jersey Resources Corporation (NYSE:NJR) stock and lowered the price target to $47 from $49.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in New Jersey Resources Corporation (NYSE:NJR) with 952,042 shares worth more than $38 million.
At the end of the third quarter of 2023, 18 hedge funds in the database of Insider Monkey held stakes worth $87 million in New Jersey Resources Corporation (NYSE:NJR), compared to 16 in the previous quarter worth $72 million.
Number of Times Stock Appeared in Top Picks of Financial Media: 3
Consolidated Edison, Inc. (NYSE:ED) has stakes in the electric, gas, and steam delivery businesses. On November 6, investment advisory Barclays maintained an Equal Weight rating on Consolidated Edison, Inc. (NYSE:ED) stock and raised the price target to $88 from $84.
At the end of the third quarter of 2023, 27 hedge funds in the database of Insider Monkey held stakes worth $350 million in Consolidated Edison, Inc. (NYSE:ED), compared to 30 in the preceding quarter worth $302 million.
Number of Times Stock Appeared in Top Picks of Financial Media: 3
Atmos Energy Corporation (NYSE:ATO) engages in the natural gas distribution, pipeline and storage business. On December 14, investment advisory Mizuho maintained a Buy rating on Atmos Energy Corporation (NYSE:ATO) stock and raised the price target to $133 from $131.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm AQR Capital Management is a leading shareholder in Atmos Energy Corporation (NYSE:ATO) with 208,045 shares worth more than $22 million.
At the end of the third quarter of 2023, 17 hedge funds in the database of Insider Monkey held stakes worth $72 million in Atmos Energy Corporation (NYSE:ATO), compared to 18 in the previous quarter worth $124 million.
Number of Times Stock Appeared in Top Picks of Financial Media: 3
MDU Resources Group, Inc. (NYSE:MDU) engages in the energy delivery business. On December 5, investment advisory Argus maintained a Hold rating on MDU Resources Group, Inc. (NYSE:MDU) stock, noting the firm was strengthening operations in the utility segment through acquisitions and expansion projects.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based firm AQR Capital Management is a leading shareholder in MDU Resources Group, Inc. (NYSE:MDU) with 1.3 million shares worth more than $27 million.
Along with Duke Energy Corporation (NYSE:DUK), Consolidated Edison, Inc. (NYSE:ED), and American Electric Power Company, Inc. (NASDAQ:AEP), MDU Resources Group, Inc. (NYSE:MDU) is one of the best utility stocks to buy according to financial media.
