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Analysts’ Top 5 Favorite S&P 500 Utilities Stocks

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Oct. 6 2017, Updated 8:01 a.m. ET

Analysts’ favorites

US utility stocks were weak recently due to proposed tax reforms and the increased possibility of another interest rate hike this year. In this series, we’ll look at analysts’ favorite utility stocks from the S&P 500 Utilities Index (XLU) based on “buy” ratings. Let’s see which of these analysts’ favorite utility stocks might please investors going forward.

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Implied gain

The chart above shows five utility stocks with the most “buy” ratings. The largest merchant power producer, NRG Energy (NRG), has the most “buy” ratings as of October 5, 2017. Nearly 90.0% of analysts tracking NRG have rated the stock a “buy.” Compared to its peers, NRG Energy also has the highest implied gain of 17.0% based on analysts’ mean price target.

NextEra Energy (NEE), the renewables giant and largest utility by market capitalization, is the second most favorite utility with 88.0% “buy” ratings. It has a potential upside of 5.0% going forward.

The five utilities mentioned above operate in different states and differ significantly in size. NRG Energy, the smallest component of the S&P 500 Utilities Index, has a market capitalization of $8.2 billion, while the largest, NextEra Energy (NEE), has a market capitalization of ~$69.0 billion.

New York–based Consolidated Edison (ED) seems to be analysts’ least favorite utility stock. It has no “buy” ratings and an implied loss of 5.0% going forward.

In the next part, let’s look at NRG Energy.

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