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Why NextEra Energy Seems Attractive Right Now

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Dec. 4 2020, Updated 10:42 a.m. ET

Analyst price targets

According to Wall Street analysts, the top constituent of the S&P 500 Utilities Index, NextEra Energy (NEE), has a price target of $149.08 against its current market price of $141.07. This target indicates a potential upside of nearly 6%. We can see in the chart below how analysts’ ratings on NextEra Energy have changed in the last few months.

None of the analysts tracking NEE has given it a “sell” recommendation since the start of the year. Analysts seem to be positive on NEE stock. As of July 18, 2017, four analysts are recommending it as a “strong buy,” nine recommend it as a “buy,” and two of them recommend it as a “hold.”

Peer Dominion Energy (D) currently has a potential upside of 4%. It has a price target of $79.44 against its current market price of $76.60.

A recent correction in Southern Company (SO) stock has given it a gain potential of 8%. It has a price target of $50.84 and is presently trading at $47.13.

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Outlook

NextEra Energy seems to offer a handsome growth potential given its strong earnings ability and extraordinary dividend growth going forward. It certainly looks pricey at the moment, but NextEra Energy might continue to create value over the long term.

Since NextEra Energy’s Oncor deal got canceled, the Florida utility might continue to look for acquisition targets. The fastest-growing utility seems well placed to achieve the earnings growth target of double the industry average. To sum up, NextEra Energy looks like a healthy combination of relatively low risk and high growth potential.

US nuclear generation is under serious threat in the last few years. To know about how utilities (XLU) have been affected and how they are coping with it, read How Nuclear Generation Utilities Have Performed Recently.

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