3 Utility Stocks to Watch as Winter Energy Demand Rises

The global utilities and energy industry is facing increasing demand, especially during winter, as higher energy consumption for heating and electricity puts pressure on existing infrastructure.

Therefore, top stocks such as The Southern Company (SO), Duke Energy (DUK), and Exelon Corporation (EXC) present promising investment opportunities as they are actively exploring and implementing newer technologies to enhance energy efficiency and grid resilience.

The growth of the utility industry is fueled by the rising need for grid optimization, better load management, and the integration of renewable energy sources, which are crucial for addressing both energy consumption and environmental challenges.

The utility and energy analytics market is experiencing significant growth, with its size reaching $3.4 billion in 2023 and projected to grow to $13.4 billion by 2032, reflecting a CAGR of 15.9%.

Considering these positive developments, let's delve deeper into Utilities – Domestic stocks:

Stock #3: Exelon Corporation (EXC)

EXC is a utility services holding company that provides electricity and natural gas distribution, transmission, and retail services across the U.S. and Canada. It also offers support services like IT, asset management, and power procurement, serving municipalities, distribution utilities, financial institutions, and residential, commercial, industrial, and governmental customers.

On December 9, ComEd (a holding of EXC) celebrated the launch of a community solar project in Boone County. Constructed on a former landfill in partnership with Ameresco, Inc. (AMRC), the project supports county government and local businesses, showcasing ComEd's commitment to renewable energy and innovative energy solutions.

On November 15, ComEd's (a holding of EXC) Power Up Academy had now accredited in partnership with City Colleges of Chicago, provides local residents with up to 13 credit hours for engineering career training. This initiative enhances ComEd's talent pipeline, supports workforce development, and strengthens community ties, aligning with its commitment to social responsibility.

It pays an annual dividend of $1.52, which translates to a dividend yield of 4.12% at the prevailing price levels.

During the fiscal third quarter that ended September 30, 2024, EXC’s operating revenues increased 2.9% year-over-year to $6.15 billion. Its operating income grew 6.5% from the year-ago value to $1.20 billion. In addition, the company’s net income attributable to common shareholders and non-GAAP operating earnings per share came in at $707 million and $0.71, up marginally and 6% over the prior-year quarter, respectively.

Analysts expect EXC’s EPS and revenue for the fourth quarter ending December 31, 2024, to increase marginally and 1.2% year-over-year to $0.60 and $5.43 billion, respectively. It surpassed the Street EPS estimates in each of the trailing four quarters, which is promising.

Over the past six months, the stock has gained 4.1% to close the last trading session at $36.87.

EXC’s POWR Ratings reflect its robust outlook. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

It is ranked #31 out of 57 stocks in the Utilities – Domestic industry.

Beyond what we have stated above, we also have given EXC grades for Growth, Value, Momentum, Stability, Sentiment, and Quality. Get all the EXC’s ratings here.

Stock #2: The Southern Company (SO)

SO provides electricity and natural gas to 8.9 million customers through a diverse energy portfolio, including renewables, nuclear, and battery storage. It manages extensive gas pipelines, offers distributed energy solutions, and deploys microgrids and digital communication services for various sectors.

On December 11, SO and Ford Pro launched a pilot program to advance EV adoption in fleet operations. The initiative aims to overcome adoption barriers and demonstrate how EV fleets can enhance grid resilience, setting a scalable framework to improve energy reliability for customers.

It pays an annual dividend of $2.88, which translates to a dividend yield of 3.46% at the prevailing price levels.

In the fiscal third quarter ended September 30, 2024, SO’s total operating revenues increased 4.2% year-over-year to $7.27 billion. Its operating income grew 12.2% from the year-ago value to $2.37 billion. In addition, the company’s non-GAAP net income and EPS in at $ 1.56 billion and $1.40, up 1.1% and 7.7% over the prior-year quarter, respectively.

Street expects SO’s revenue and EPS for the year ending December 31, 2024, to increase 5.7% and 10.5% year-over-year to $ 26.69 billion and $ 4.03, respectively. It surpassed the consensus revenue estimates in all of the trailing four quarters.

Shares of SO have gained 13.9% over the past year and is up 18.7% year-to-date to close the last trading session at $83.20.

SO’s POWR Ratings reflect strong prospects. It is ranked #28 in the same industry.

To access SO’s Growth, Value, Momentum, Stability, Sentiment, and Quality ratings, click here.

Stock #1: Duke Energy Corporation (DUK)

DUK operates in the U.S. through two segments: Electric Utilities and Infrastructure (EU&I), which generates and distributes electricity from various sources, and Gas Utilities and Infrastructure (GU&I), which supplies natural gas and invests in related infrastructure projects.

On November 21, DUK has launched the Duke Energy + Electrada Fleet Mobility Microgrid in Mount Holly, a pioneering electrification center for commercial and public electric fleet vehicles. This first-of-its-kind project in the U.S. offers a zero-emission, carbon-free microgrid option for fleet charging.

It pays an annual dividend of $4.18, which translates to a dividend yield of 3.84% at the prevailing price levels.

DUK’s total revenues increased 2% year-over-year to $8.15 billion in the fiscal third quarter that ended on September 30, 2024. Its operating income came in at $ 2.14 billion, up 1.6% year-over-year. In addition, the company’s net income attributable to Duke Energy Corporation common stockholders is at $1.23 billion, up 1.1% and adjusted EPS is $1.62 over the prior-year quarter.

Street expects DUK’s revenue for the fiscal fourth quarter (ending December 31, 2024) to increase 1.3% year-over-year to $ 7.30 billion. Its EPS for the same quarter is likely to increase 11.3% year-over-year to $1.68. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters.

Shares of DUK have gained 11% over the past year and is up 12.1% year-to-date to close the last trading session at $108.82.

DUK’s bright prospects are apparent in its POWR Ratings.

It has a B grade for Stability. It is ranked #14 in the same industry.

Click here to see DUK’s ratings for Growth, Value, Momentum, Sentiment, and Quality.

What To Do Next?

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SO shares rose $0.01 (+0.01%) in premarket trading Monday. Year-to-date, SO has gained 23.02%, versus a 28.32% rise in the benchmark S&P 500 index during the same period.

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.

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