Genie Energy Ltd., Cadiz Inc., and Enel Chile S.A. are among the top-performing utilities stocks this month, each providing investors with returns in excess of 110% in the past year.
Utilities stocks are leveling out after a volatile 2022. The Utilities Select Sector SPDR ETF (XLU) has fallen by 3% in the past 12 months, compared to the Russell 1000 index’s 4% gain over the same period.
Below, we look at the top utilities stocks in the categories of best value, fastest growth, and most momentum. All data are as of May 8.
Best Value Utilities Stocks
These are the utilities stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.
| Best Value Utilities Stocks | |||
|---|---|---|---|
| Price ($) | Market Capitalization (Market Cap) ($B) | 12-Month Trailing P/E Ratio | |
| Enel Chile S.A. (ENIC) | 2.99 | 0.4 | 2.8 |
| Brookfield Renewable Corp. (BEPC) | 43.98 | 0.5 | 4.2 |
| Pampa Energia S.A. (PAM) | 33.81 | 1.8 | 4.3 |
Source: YCharts
- Enel Chile S.A.: Enel is a Chilean-based electricity provider. The company creates electricity from solar, wind, and geothermal power plants.
- Brookfield Renewable Corp.: Brookfield Renewable owns and operates pure-play renewable energy facilities focusing on wind, solar, and hydroelectric power. Brookfield Renewable and EIG Consortium entered a binding agreement in March to acquire 100% of Origin Energy Ltd.’s energy markets business, “Australia’s largest integrated power generator and energy retailer.”
- Pampa Energy S.A.: Pampa Energia is an integrated energy company based in Argentina operating hydroelectric plants, thermal plants, and wind farms. The company also explores and produces natural gas, oil, and various petrochemicals.
Fastest-Growing Utilities Stocks
These are the top utilities stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth.
Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with a quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.
| Fastest-Growing Utilities Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| Altus Power Inc. (AMPS) | 4.45 | 0.7 | 600 | 24 |
| Cadiz Inc. (CDZI) | 4.67 | 0.3 | N/A (See company description) | 304 |
| Capital Power Corp. (CPX.TO) | CA$45.43 | CA$5.3 | 148 | 153 |
Source: YCharts
- Altus Power Inc.: Altus Power is a clean electrification company that services commercial, industrial, and public industries. At the end of 2022, Altus Power reached an agreement with True Green Capital Management LLC to acquire 220 MW of solar assets for $293 million.
- Cadiz Inc.: Cadiz is a water treatment company that offers clean water resources for agricultural development. Note Cadiz doesn’t have an EPS growth figure in the table above because the company reported negative EPS in the most recent quarter.
- Capital Power Corp.: Capital Power owns and operates 29 renewable energy facilities located throughout North America. On May 1, the company released in first-quarter earnings in which it announced the appointment of Avik Dey as president and CEO. Net income in the first quarter more than doubled from the year before.
Utilities Stocks With the Most Momentum
These are the utilities stocks that had the highest total return over the past 12 months.
| Utilities Stocks With the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Genie Energy Ltd. (GNE) | 14.11 | 0.4 | 129 |
| Cadiz Inc. (CDZI) | 4.67 | 0.3 | 129 |
| Enel Chile S.A. (ENIC) | 2.99 | 4.1 | 118 |
| Russell 1000 | N/A | N/A | 5 |
| Utilities Select Sector SPDR ETF (XLU) | N/A | N/A | -3 |
Source: YCharts
- Genie Energy Ltd.: Genie is an energy provider that supplies electricity and natural gas for residential and business customers. The company also operates a solar energy business segment. In late March, Genie Renewables acquired the rights to a 6.25-megawatt solar generation site in upstate New York. Genie’s revenue increased 23% year-over-year in the first quarter of 2023.
- Cadiz Inc.: See company description above.
- Enel Chile S.A.: See company description above.
The Impact of Interest Rates on Utilities Stocks
Those who invest in utilities stocks should understand how fluctuations in interest rates can influence their performance. Typically, changing interest rates affect this sector in two ways: competition with fixed-interest securities and the cost of servicing debt.
Competition With Fixed Interest Securities: Generally, those who invest in this group prefer yield over growth. Therefore, when interest rates are high, these investors favor fixed-interest securities over utilities stocks as they provide attractive risk-free returns.
For example, if the U.S. 10-year Treasury note and a utilities stock both yield 3%, risk-averse investors would invest in the Treasury note because it offers the same yield but isn’t affected by company or market risk. However, these investors would favor utilities stocks over fixed-interest securities when interest rates are low or falling because the utilities stocks offer greater returns while typically displaying lower volatility than stocks in other sectors.
Cost of Servicing Debt: Utilities companies carry high debt levels to build, maintain, and upgrade essential infrastructure, such as electricity grids, gas pipelines, water systems, and renewable energy sources. Therefore, servicing that debt becomes more difficult when interest rates rise. If utilities companies are unable to pass extra financing costs on to customers, they may be partially borne by investors.
Advantages of Utilities Stocks
Most utilities companies pay investors steady dividends as they form part of a regulated industry with highly predictable cash flows. In addition, ongoing demand for their services, irrespective of the economy’s health, makes them an attractive safe-haven investment during periods of economic uncertainty, such as during a recession or downturn.
