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Analyzing Wall Street’s Top 5 S&P 500 Utilities Stocks

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Analysts’ favorites

After correcting more than 12% in the last three months, US utilities continue to look weak, considering the Fed’s aggressive stance on interest rate hikes this year. Let’s take a look at how analysts view utilities at the moment. In this series, we’ll look at analysts’ favorite utility stocks from the S&P 500 Utilities Index (XLU) based on their “buy” ratings.

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Implied gain

The chart above shows the five utility stocks with the most “buy” ratings. The largest utility by market capitalization, NextEra Energy (NEE), has the most “buy” ratings as of March 7. More than 88.0% of analysts tracking NEE have rated the stock a “buy.” According to Wall Street analysts’ mean price target, NextEra Energy offers a potential gain of more than 10% for the next 12 months.

Analysts also look positive about the country’s largest merchant power player, NRG Energy (NRG). Nearly 87% of analysts currently rate the stock a “buy.” NRG offers decent potential upside of 15% in a year from its current market price.

These five utilities operate in different states, and they differ in size as well. NRG Energy, one of the smallest components of the S&P 500 Utilities Index, has a market capitalization of $9.2 billion. The largest of the five, NextEra Energy (NEE), has a market capitalization of $73.0 billion.

Broader utilities (IDU) have significantly underperformed broader markets recently. Let’s see if any utility stocks among analysts’ favorites could please investors going forward.

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