Analyst price targets
Many top utility stocks are offering flattish potential upside due to the recent rally, based on analysts’ estimates. NRG Energy (NRG) stock offers a solid gain potential of ~35% for the next 12 months. Among the 11 analysts tracking NRG Energy stock, four recommended a “buy,” four recommended a “strong buy,” and three recommended a “hold.” None of the analysts recommended a “sell” as of July 1.
Analysts expect a fair upside potential of 9% from AES Corporation (AES) next year. They’ve given AES a median target price of $18.3, compared to its current market price of $16.8. Among the ten analysts tracking AES, four recommended a “buy,” one recommended a “strong buy,” and five recommended a “hold” as of June 24. Bank of America Merrill Lynch raised AES’s rating to “neutral” from “underperform” on June 20.
Public Service Enterprise Group
Among the 17 analysts tracking Public Service Enterprise Group (PEG) stock, six analysts recommend it as a “strong buy,” five recommend a “buy,” and six recommend a “hold.” None of them recommend “sell” as of July 1. Guggenheim Securities raised PEG’s price target from $62.0 to $64.0 last week.
CenterPoint Energy (CNP) stock offers an upside potential of ~11% for the next 12 months. Among the 19 analysts covering PEG, four recommend a “strong buy,” six recommend a “buy,” and nine recommend a “hold.”
These utility stocks offer handsome total return potential, based on Wall Street price targets and a fair dividend yield. NRG yields 0.3%, the lowest among peers.
Utility stocks seem pricey at the moment. However, geopolitical tensions could continue to drive broader-market volatility, which might push investors to safe havens such as utilities. A probable interest rate cut this year could make utilities attractive compared to bonds and broader markets.
Learn how top utility stocks have fared and how they seem placed for the future in Analyzing the Top Utility Stocks in 2019