Market Analysis by covering: Southern Company, American Electric Power Company Inc, Natural Gas Futures, Nextera Energy Inc. Read 's Market Analysis on Investing.com
Evercore ISI Names 7 Top Picks in Power and Automation Amid Sector TransformationAmericans’ energy bills have increased by 13% since President Donald Trump took office in January 2025. And while that’s bad news for households with budgets already stretched thin, for those engaged in sector investing, it could be a boon as we head into the new year.
Unlike suffering consumer discretionary stocks, utilities—including heat and electricity—are essentials for every American home, making those elevated rates a revenue booster for companies operating in that sector.The utilities sector is limping into the new year, having posted over a 3% loss over the past month—the worst performance among all 11 sectors in the S&P 500. But when the calendar turns to 2026, that corner of the market might begin to enjoy long-term tailwinds. That’s because Americans are facing substantially higher electric bills amid a backdrop of lagging renewable energy production, higher input prices for fossil fuel-powered power generation, and escalating AI electricity demand. As the Trump administration continues its attempts to revive the fossil fuel industry, permitting for renewable energy projects is drying up. In turn, those efforts have resulted in the delay or cancellation of nearly 25,000 megawatts of planned electric power production. Put another way, the White House has effectively prevented the equivalent of enough electricity generation to power 13.17 million homes, according to a report released by Climate Power earlier in December. Climate Power also found that prices for natural gas are up 98% since Trump took office. That poses a problem, as the U.S. Energy Information Administration’s data shows that natural gas accounts for more than 43% of all U.S. electricity generation by power source. Meanwhile, the growing demand for AI data centers is driving rates higher nationwide. That has been well-documented alongside some AI stocks posting triple-digit gains in 2025. At the same time, some utility stocks have been capitalizing on the trend as demand for electricity skyrockets. That’s good news for buy-and-hold investors. AI data centers currently account for 4.4% of all U.S. electricity consumption. However, by 2030, that figure is expected to grow to an estimated 12% to 20%. At the same time, gas and electric utilities have raised or sought to increase bills by more than $85 billion, resulting in Americans in 49 out of 50 states already facing rising utility costs. Until the data centers servicing AI tech companies are independently powered, that growing electric consumption is likely to help the utilities sector produce notably larger gains, which could be a benefit for shareholders of the First Trust Utilities AlphaDEX Fund.The ETF has a bent on higher upside potential via the inclusion of more companies and tracks the StrataQuant Utilities Index, which selects its holdings from theThe index also ranks stocks by growth factors, including three-, six-, and 12-month price appreciation, one-year sales growth, and value factors including cash flow, return on assets, and more. The result is a portfolio of high-growth potential utility stocks with balanced allocations, a manageable 0.63% expense ratio, and a strong dividend of $1.03 per share. Those balanced allocations translate to none of its top holdings having a weighting above 5% at the time of writing.Like the index it tracks, this approach results in lower concentration risk. That’s something that has materialized over the past year. While the aforementioned XLU’s S&P 500 utilities sector focus has resulted in an 11.35% year-to-date gain, trailing the market in 2025, the FXU has gained 17.65% YTD and outperformed both the S&P 500 and the Russell 1000.While the fund isn’t illiquid, the FXU has average daily trading volume of just 256,355 shares compared to 22.32 million shares forOver the past 12 months, those investors have pumped more than $610 million into the fund while outflows were limited to just $183 million. Meanwhile, current short interest stands at an insignificant 0.25% of the FXU’s float. Because ETFs aren’t “rated” the same way as single stocks, what matters is sentiment toward the companies inside the fund. Based on 329 analyst ratings of the companies that comprise the ETF’s portfolio, the fund receives a Moderate Buy rating.Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks. Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.would like to remind you that the data contained in this website is not necessarily real-time nor accurate. 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