Utilities remain one of the clearest ways to invest in the economy’s expanding electricity needs, but the sector is no longer only a defensive-income trade. Data centers and AI infrastructure are increasing demand for power, transmission capacity, and grid reliability, while utilities are also committing capital to generation and system upgrades. That creates a potentially durable growth narrative, although it also makes execution, financing, and customer affordability more important. Morningstar’s June 2026 note highlighted the tension: utilities had pulled back from their February peak even as data-center construction continued to support larger capital plans.
Regulated electric utilities sit at the center of the theme because approved infrastructure spending can expand rate base over time. Renewable generation, storage, transmission, and grid modernization add additional investment avenues, supported by clean-energy mandates and longer-term decarbonization goals. Gas utilities generally offer steadier but slower exposure, while water utilities provide a smaller and more defensive business model. Independent power and clean-energy companies can offer greater growth sensitivity, but they are also more exposed to policy changes, borrowing costs, and project timing.
The seven companies below cover that range, from regulated gas and water providers to large electric utilities with generation, transmission, storage, and grid operations. This is a countdown, so the article begins with the seventh-ranked stock and moves toward the best-positioned pick at number one. Along the way, the analysis weighs each company’s direct exposure to the utilities theme against profitability, growth, valuation, earnings execution, and analyst sentiment.
Our screen focuses on US-listed utilities companies with market capitalizations above $500 million. The ranking first considers depth of exposure to the utilities theme, emphasizing regulated electricity, generation, transmission, distribution, grid infrastructure, gas, and water operations; business fundamentals then determine the order among comparable candidates. We also consider margins, return measures, revenue and earnings trends, valuation ratios, earnings-surprise history, analyst consensus, and the composite quality grade. The list is presented in countdown order from #7 to #1, with the highest-ranked stock reserved for the end.
What they do. The company purchases, distributes, and transports natural gas through Southwest Gas Corporation. Its revenue model includes tariff sales and transportation services for residential, commercial, and industrial customers in Arizona, Nevada, and California, complemented by a pipeline transmission system and an LNG storage facility. It served approximately 2,281,000 customers as of December 31, 2025, giving it a substantial regional regulated-gas footprint.
Why it fits. Southwest Gas is a direct play on the gas-utility segment, which offers recurring delivery demand but generally less exposure to the electricity, data-center, and grid-expansion cycle than regulated electric utilities. Its combination of distribution, transportation, pipeline transmission, and storage gives the stock broader gas-infrastructure exposure than a simple local distribution business. That makes SWX relevant to the theme, but its position lower in the countdown reflects its narrower connection to the sector’s most powerful growth driver.
Numbers that matter. Southwest Gas produced a 54.0% gross margin, a 24.16% operating margin, and a 31.4% net margin. Revenue declined 9.6% year over year, although earnings growth was positive at 20.9%; trailing EPS was $3.88 and the next-year EPS estimate is $4.9381. The stock’s trailing P/E was 22.9742 and forward P/E was 18.622, while return on equity was 6.83% and return on assets was 2.82%. Those figures show improving earnings momentum but a less compelling growth profile than the leading electric names.
Recent momentum. Earnings have been uneven, with a 3/8 beat rate across the reported quarters. The August 5, 2026 release missed estimates by 4.3%, with EPS of $0.45 versus $0.47 expected, and the May release missed by 7.7%. Analysts currently list four Holds and one Sell, alongside a 3.625 consensus score and an average target of $102.7143. The mixed earnings record and neutral overall recommendation help explain the cautious ranking.
What they do. American Water Works provides regulated water and wastewater services through subsidiaries across 14 states. The company also operates facilities for military installations and municipal customers, with infrastructure that includes approximately 80 surface-water treatment plants, 520 groundwater treatment plants, 170 wastewater treatment plants, and 55,000 miles of mains and pipes. Its approximately 3.6 million active customers span residential, commercial, industrial, government, and utility end markets.
Why it fits.AWK represents the water-utility sub-segment, a smaller and more defensive part of the broader utilities universe. Water and wastewater infrastructure is essential, and the company’s extensive treatment, pumping, storage, and distribution network provides direct exposure to long-lived utility assets. However, it is less directly connected to the surge in electricity consumption from data centers and AI infrastructure, which is why the stock ranks below the large regulated electric operators.
Numbers that matter. American Water Works posted a 61.5% gross margin, a 40.66% operating margin, and a 21.35% net margin. Revenue grew 6.2% year over year and earnings increased 8.6%, with trailing EPS of $5.86 and a next-year EPS estimate of $6.5658. Valuation is relatively full at a trailing P/E of 23.8038 and forward P/E of 20.7039. Return on equity was 10.1% and return on assets was 3.52%, supporting the quality of the underlying regulated business while leaving less room for valuation expansion.
Recent momentum. The latest quarter was a modest positive: July 29, 2026 EPS was $1.61 versus $1.59 expected, a 1.3% beat. That result followed a 7.3% miss in April, and the company’s eight-quarter beat rate stands at 3/8. Analyst coverage shows nine Holds and one Sell, with a 3.3846 consensus score and an average target of $140.3637. The profile is therefore stable but not supported by a consistently strong earnings-surprise trend.
What they do. Eversource is a utility holding company operating electric distribution, electric transmission, natural-gas distribution, and water-distribution businesses. It also owns solar facilities and provides water services to residential, commercial, industrial, municipal, and fire-protection customers in Connecticut, Massachusetts, and New Hampshire. That regional mix gives Eversource several regulated utility revenue streams rather than reliance on a single operating segment.
Why it fits. Eversource has meaningful exposure to the core utilities theme through both electric distribution and transmission, the infrastructure categories most closely associated with rising power demand and grid reliability spending. Its gas and water operations provide additional regulated exposure, while solar facilities add a clean-energy component. The diversified footprint is attractive, but the company’s recent earnings decline and weaker composite grade place it below the stronger electric-focused candidates.
Numbers that matter. Eversource reported a 52.8% gross margin, a 23.92% operating margin, and a 10.35% net margin. Revenue growth was 2.3% year over year, while earnings growth fell 85.4%; trailing EPS was $3.87 and the next-year EPS estimate was $4.9165. The trailing P/E was 18.2171 and forward P/E was 15.1057, below several higher-ranked peers. Return on equity was 9.02% and return on assets was 3.3%, showing respectable operating returns despite the recent earnings pressure.
Recent momentum. Eversource has a comparatively strong 6/8 beat rate, although the latest report was slightly disappointing: July 30, 2026 EPS of $0.87 missed the $0.88 estimate by 1.1%. The preceding quarter beat by 6.1%, suggesting that execution has generally been better than the headline annual earnings-growth figure. Analysts list three Buys, six Holds, and two Sells, with a 3.6842 consensus score and an average target of $73.5833.
Get AI research on any stock
Instant reports, daily intelligence, and an AI analyst in your pocket.
What they do. Xcel Energy operates regulated electric and natural-gas utility businesses across portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas, and Wisconsin. Its electricity portfolio includes wind, nuclear, hydroelectric, biomass, solar, coal, and natural-gas generation, as well as purchased power and transmission services. The company also distributes gas, operates pipelines and storage facilities, and invests in community solar and energy-technology assets.
Why it fits. Xcel is a broad-based regulated electric exposure with both generation and delivery capabilities. Its ownership and contracting across renewable, nuclear, hydroelectric, and thermal generation connect it to the sector’s transition and reliability needs, while its transmission and distribution operations align with the grid-investment cycle. The natural-gas business adds diversification, but the electric platform remains the principal reason XEL ranks above the more narrowly focused gas and water names.
Numbers that matter. Xcel produced a 46.8% gross margin, a 22.7% operating margin, and a 15.28% net margin. Revenue declined 5.1% year over year, but earnings growth was 24.0%; trailing EPS was $3.63 and the next-year EPS estimate was $4.5425. The trailing P/E was 20.8017 and forward P/E was 17.2117. Return on equity was 9.92% and return on assets was 2.37%, a reasonable profitability profile alongside meaningful capital-intensive exposure.
Recent momentum. The earnings record is mixed, with only a 2/8 beat rate, but the latest quarter offered a strong improvement: July 30, 2026 EPS of $0.93 exceeded the $0.79 estimate by 17.7%. Two earlier quarters matched estimates exactly, while the October 2025 quarter missed by 6.1%. Analyst coverage includes three Buys, four Holds, and one Sell, producing a 4.1765 consensus score and an average target of $91.7647.
What they do. American Electric Power generates, transmits, and distributes electricity through vertically integrated, transmission, and distribution operations. Its generation mix includes coal, nuclear, natural gas, renewable, hydro, solar, and wind assets, while its transmission business serves a large regional network. The company operates approximately 252,000 circuit miles of distribution lines, 38,000 circuit miles of transmission lines, and 25,000 MWs of regulated owned generating capacity.
Why it fits.AEP is one of the deepest direct exposures to the utilities theme because it combines regulated generation, transmission, and distribution at substantial scale. Its transmission network and large regulated generating fleet are particularly relevant to an environment in which rising electricity demand requires additional reliability and system capacity. The breadth of its operating model also gives AEP exposure to multiple stages of the power value chain, although the company remains sensitive to financing and regulatory outcomes.
Numbers that matter.AEP reported a 46.4% gross margin, a 23.25% operating margin, and a 13.78% net margin. Revenue increased 7.0% year over year, but earnings growth declined 43.2%; trailing EPS was $5.80 and the next-year EPS estimate was $6.8532. The trailing P/E was 21.3052 and forward P/E was 17.8891. Return on equity was 10.13% and return on assets was 2.98%, combining solid equity returns with a capital-heavy balance-sheet profile.
Recent momentum.AEP has beaten estimates in five of the last eight quarters, though the latest release missed: July 30, 2026 EPS was $1.36 versus $1.49 expected, an 8.7% shortfall. The company had beaten by 4.5% in May and by 4.4% in February, so the recent record remains more constructive than the latest quarter alone suggests. Analysts report four Buys and 14 Holds, with no Sell count provided, a 3.2857 consensus score, and an average target of $144.
Pick #2Premium members only
Premium members see this pick's full breakdown — investment thesis, key financial metrics, recent earnings execution, and analyst consensus.
Premium members get the complete breakdown — pick rationale, financial metrics, and recent earnings detail.
The screen is limited to US-listed utilities companies with market capitalizations above $500 million. Companies are ranked primarily by the depth and directness of their utilities exposure, with regulated electric generation, transmission, distribution, and grid infrastructure receiving the greatest thematic weight. Gas, water, storage, renewable, and related infrastructure exposure are also considered. Business fundamentals then refine the order, including profitability, returns, revenue and earnings growth, trailing and forward P/E ratios, earnings-surprise history, analyst consensus, and composite quality grades. The article is refreshed monthly using the latest available financial and market data, and the presentation remains a countdown from #7 to #1.
▌The Daily Briefing · Free
A new stock idea, every evening.
One stock worth watching each weekday, plus the analysis behind it. Free, in your inbox.
