9 Best High Quality Utilities Stocks for January 2026
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Market Overview & Selection Criteria
Utility stocks remain a cornerstone for stability in portfolios amid market volatility, offering essential services like electricity, water, and infrastructure with predictable demand. This collection highlights 9 high-quality utility stocks selected using ValueSense's proprietary screening for strong Quality ratings (6.6-7.7), attractive intrinsic value upside, solid ROIC, healthy FCF margins, and revenue growth potential. Criteria focused on utilities trading below intrinsic value, with market caps from $550.5M to $91.5B, emphasizing undervalued stocks in power generation, distribution, and water services. These picks represent best value stocks in the sector, analyzed via ValueSense metrics for educational purposes.
Featured Stock Analysis
Stock #1: Duke Energy Corporation (DUK)
| Metric | Value |
|---|---|
| Market Cap | $91.5B |
| Quality Rating | 6.6 |
| Intrinsic Value | $176.7 |
| 1Y Return | 9.9% |
| Revenue | $31.7B |
| Free Cash Flow | $8,960.0M |
| Revenue Growth | 4.8% |
| FCF margin | 28.3% |
| Gross margin | 69.9% |
| ROIC | 5.2% |
| Total Debt to Equity | 19.7% |
Investment Thesis
Duke Energy Corporation (DUK) stands out with a Quality rating of 6.6 and intrinsic value of $176.7, suggesting significant upside for value-oriented analysis. The company boasts a massive Market Cap of $91.5B, Revenue of $31.7B, and robust Free Cash Flow of $8,960.0M, underpinned by a healthy FCF margin of 28.3% and Gross margin of 69.9%. With Revenue growth at 4.8% and ROIC of 5.2%, DUK demonstrates steady operational efficiency in power generation and distribution. 1Y Return of 9.9% reflects resilience, while low Total Debt to Equity of 19.7% supports financial stability, making it a core holding for utility-focused watchlists.
This analysis highlights DUK's position as a large-cap leader with consistent cash generation, ideal for examining long-term utility stock performance through ValueSense tools.
Key Catalysts
- Strong FCF generation at $8,960.0M fueling dividends and growth initiatives
- High Gross margin 69.9% indicating pricing power in regulated markets
- Modest but steady Revenue growth 4.8% from expanding energy demand
- Low leverage (Total Debt to Equity 19.7%) enabling reinvestment
Risk Factors
- Moderate ROIC 5.2% may limit aggressive expansion
- Regulatory pressures on utility rates could impact margins
- Slower growth profile compared to emerging utilities
Stock #2: Korea Electric Power Corporation (KEP)
| Metric | Value |
|---|---|
| Market Cap | $20.9B |
| Quality Rating | 6.7 |
| Intrinsic Value | $33.2 |
| 1Y Return | 149.4% |
| Revenue | â©97.3T |
| Free Cash Flow | â©1,457.4B |
| Revenue Growth | 5.3% |
| FCF margin | 1.5% |
| Gross margin | 60.9% |
| ROIC | 6.3% |
| Total Debt to Equity | N/A |
Investment Thesis
Korea Electric Power Corporation (KEP) earns a Quality rating of 6.7 with intrinsic value at $33.2, positioning it as an undervalued international utility play. Market Cap stands at $20.9B, supported by enormous Revenue of â©97.3T and Free Cash Flow of â©1,457.4B. Despite a low FCF margin of 1.5%, Gross margin of 60.9% and ROIC of 6.3% signal operational strength, with Revenue growth at 5.3%. Exceptional 1Y Return of 149.4% underscores momentum, though Total Debt to Equity is N/A, warranting scrutiny in global contexts.
KEP's scale in South Korea's power sector offers educational insights into high-growth utilities via ValueSense's intrinsic value framework.
Key Catalysts
- Explosive 1Y Return 149.4% from market recovery and demand
- Massive revenue base (â©97.3T) providing economies of scale
- Solid ROIC 6.3% for efficient capital deployment
- Steady Revenue growth 5.3% tied to electrification trends
Risk Factors
- Thin FCF margin 1.5% vulnerable to cost fluctuations
- Currency and geopolitical risks in international exposure
- Opaque debt metrics (N/A) requiring deeper due diligence
Stock #3: Companhia de Saneamento Básico do Estado de São Paulo - SABESP (SBS)
| Metric | Value |
|---|---|
| Market Cap | $16.7B |
| Quality Rating | 7.0 |
| Intrinsic Value | $33.3 |
| 1Y Return | 69.2% |
| Revenue | R$41.2B |
| Free Cash Flow | R$10.1B |
| Revenue Growth | 15.9% |
| FCF margin | 24.5% |
| Gross margin | 35.3% |
| ROIC | 18.6% |
| Total Debt to Equity | 81.8% |
Investment Thesis
Companhia de Saneamento Básico do Estado de São Paulo - SABESP (SBS) features a strong Quality rating of 7.0 and intrinsic value of $33.3, highlighting water utility potential. With Market Cap of $16.7B, Revenue of R$41.2B, and Free Cash Flow of R$10.1B, it shows FCF margin of 24.5% and impressive Revenue growth of 15.9%. ROIC at 18.6% excels among peers, though Total Debt to Equity of 81.8% merits monitoring. 1Y Return of 69.2% reflects strong performance in essential services.
SBS provides a case study in high-ROIC water infrastructure for stock watchlist diversification.
Key Catalysts
- Exceptional ROIC 18.6% driving superior returns on capital
- Robust Revenue growth 15.9% from infrastructure expansion
- Healthy FCF margin 24.5% supporting operations
- Strong 1Y Return 69.2% momentum
Risk Factors
- Elevated Total Debt to Equity 81.8% increasing leverage risk
- Currency volatility in Brazilian real
- Regulatory changes in water pricing
Stock #4: OGE Energy Corp. (OGE)
| Metric | Value |
|---|---|
| Market Cap | $8,608.1M |
| Quality Rating | 6.9 |
| Intrinsic Value | $40.1 |
| 1Y Return | 4.9% |
| Revenue | $3,294.8M |
| Free Cash Flow | $585.3M |
| Revenue Growth | 18.0% |
| FCF margin | 17.8% |
| Gross margin | 50.1% |
| ROIC | 11.6% |
| Total Debt to Equity | (61.7%) |
Investment Thesis
OGE Energy Corp. (OGE) scores a Quality rating of 6.9 with intrinsic value at $40.1, appealing for mid-cap utility exposure. Market Cap of $8,608.1M pairs with Revenue of $3,294.8M and Free Cash Flow of $585.3M, yielding FCF margin of 17.8%. Revenue growth surges at 18.0%, complemented by ROIC of 11.6% and Gross margin of 50.1%. Total Debt to Equity at 61.7% indicates net cash position, despite modest 1Y Return of 4.9%.
This analysis underscores OGE's growth trajectory in regional power markets.
Key Catalysts
- High Revenue growth 18.0% from demand expansion
- Strong ROIC 11.6% for efficient operations
- Solid FCF margin 17.8% cash generation
- Favorable debt position (61.7%)
Risk Factors
- Lower 1Y Return 4.9% vs. peers
- Regional market concentration risks
- Growth sustainability questions
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Stock #5: Brookfield Infrastructure Corporation (BIPC)
| Metric | Value |
|---|---|
| Market Cap | $5,424.1M |
| Quality Rating | 7.2 |
| Intrinsic Value | $147.9 |
| 1Y Return | 15.0% |
| Revenue | $3,656.0M |
| Free Cash Flow | $869.4M |
| Revenue Growth | (0.1%) |
| FCF margin | 23.8% |
| Gross margin | 62.7% |
| ROIC | 9.3% |
| Total Debt to Equity | 613.6% |
Investment Thesis
Brookfield Infrastructure Corporation (BIPC) achieves Quality rating 7.2 and intrinsic value $147.9, focusing on global infrastructure. Market Cap $5,424.1M supports Revenue $3,656.0M and Free Cash Flow $869.4M, with FCF margin 23.8% and Gross margin 62.7%. ROIC of 9.3% holds steady despite slight Revenue growth decline -0.1%, and high Total Debt to Equity 613.6%. 1Y Return of 15.0% adds appeal.
BIPC offers insights into leveraged infrastructure plays.
Key Catalysts
- Attractive FCF margin 23.8% for distributions
- High Gross margin 62.7% operational strength
- 1Y Return 15.0% from asset optimization
- Global diversification benefits
Risk Factors
- Very high Total Debt to Equity 613.6% leverage risk
- Negative Revenue growth -0.1%
- Interest rate sensitivity
Stock #6: DTE Energy Company 2021 Series (DTG)
| Metric | Value |
|---|---|
| Market Cap | $3,579.5M |
| Quality Rating | 6.7 |
| Intrinsic Value | $140.9 |
| 1Y Return | -4.9% |
| Revenue | $14.8B |
| Free Cash Flow | $4,150.0M |
| Revenue Growth | 20.6% |
| FCF margin | 28.0% |
| Gross margin | 118.8% |
| ROIC | 12.4% |
| Total Debt to Equity | 208.0% |
Investment Thesis
DTE Energy Company 2021 Series (DTG) has Quality rating 6.7 and intrinsic value $140.9. Market Cap $3,579.5M aligns with Revenue $14.8B and exceptional Free Cash Flow $4,150.0M (FCF margin 28.0%). Revenue growth 20.6%, Gross margin 118.8%, ROIC 12.4%, but Total Debt to Equity 208.0%. 1Y Return -4.9% suggests rebound potential.
DTG exemplifies high-margin energy analysis.
Key Catalysts
- Outstanding Gross margin 118.8%
- Strong Revenue growth 20.6%
- High FCF margin 28.0%
- Solid ROIC 12.4%
Risk Factors
- Negative 1Y Return -4.9%
- High Total Debt to Equity 208.0%
- Series-specific structure risks
Stock #7: Otter Tail Corporation (OTTR)
| Metric | Value |
|---|---|
| Market Cap | $3,392.5M |
| Quality Rating | 6.7 |
| Intrinsic Value | $83.1 |
| 1Y Return | 13.2% |
| Revenue | $1,299.1M |
| Free Cash Flow | $106.7M |
| Revenue Growth | (3.2%) |
| FCF margin | 8.2% |
| Gross margin | 39.3% |
| ROIC | 9.8% |
| Total Debt to Equity | 57.0% |
Investment Thesis
Otter Tail Corporation (OTTR) rates 6.7 in Quality with intrinsic value $83.1. Market Cap $3,392.5M, Revenue $1,299.1M, Free Cash Flow $106.7M (FCF margin 8.2%). ROIC 9.8%, Gross margin 39.3%, Total Debt to Equity 57.0%, slight Revenue growth decline -3.2%, 1Y Return 13.2%.
OTTR provides balanced regional utility metrics.
Key Catalysts
- Positive 1Y Return 13.2%
- Respectable ROIC 9.8%
- Manageable Total Debt to Equity 57.0%
- Stable operations
Risk Factors
- Low FCF margin 8.2%
- Negative Revenue growth -3.2%
- Smaller scale vulnerabilities
Stock #8: Chesapeake Utilities Corporation (CPK)
| Metric | Value |
|---|---|
| Market Cap | $2,929.6M |
| Quality Rating | 7.2 |
| Intrinsic Value | $130.5 |
| 1Y Return | 3.8% |
| Revenue | $886.1M |
| Free Cash Flow | $224.4M |
| Revenue Growth | 17.0% |
| FCF margin | 25.3% |
| Gross margin | 44.5% |
| ROIC | 82.9% |
| Total Debt to Equity | (6.1%) |
Investment Thesis
Chesapeake Utilities Corporation (CPK) excels with Quality rating 7.2 and intrinsic value $130.5. Market Cap $2,929.6M, Revenue $886.1M, Free Cash Flow $224.4M (FCF margin 25.3%). Exceptional ROIC 82.9%, Revenue growth 17.0%, Gross margin 44.5%, low Total Debt to Equity -6.1%, 1Y Return 3.8%.
CPK highlights high-ROIC efficiency.
Key Catalysts
- Phenomenal ROIC 82.9%
- Strong Revenue growth 17.0%
- High FCF margin 25.3%
- Net cash position (-6.1% debt)
Risk Factors
- Modest 1Y Return 3.8%
- Growth execution risks
- Regional demand fluctuations
Stock #9: Consolidated Water Co. Ltd. (CWCO)
| Metric | Value |
|---|---|
| Market Cap | $550.5M |
| Quality Rating | 7.7 |
| Intrinsic Value | $7,684.1K |
| 1Y Return | 34.8% |
| Revenue | $134.0T |
| Free Cash Flow | $31.5T |
| Revenue Growth | 84,356,440.2% |
| FCF margin | 23.5% |
| Gross margin | 34.1% |
| ROIC | 16,099,856.9% |
| Total Debt to Equity | 0.3% |
Investment Thesis
Consolidated Water Co. Ltd. (CWCO) tops with Quality rating 7.7 and intrinsic value $7,684.1K. Market Cap $550.5M, immense Revenue $134.0T, Free Cash Flow $31.5T (FCF margin 23.5%). Extreme Revenue growth 84,356,440.2%, ROIC 16,099,856.9%, Gross margin 34.1%, minimal Total Debt to Equity 0.3%, 1Y Return 34.8%.
CWCO showcases hyper-growth water desalination potential.
Key Catalysts
- Explosive Revenue growth 84,356,440.2%
- Ultra-high ROIC 16,099,856.9%
- Strong 1Y Return 34.8%
- Near-zero debt 0.3%
Risk Factors
- Extreme metrics requiring validation
- Small cap volatility $550.5M
- Scalability in niche markets
Portfolio Diversification Insights
These 9 utility stocks create a diversified stock watchlist spanning power (DUK, KEP, OGE), water (SBS, CWCO), infrastructure (BIPC), and regional utilities (DTG, OTTR, CPK). Large-caps like DUK (38% allocation potential) anchor stability, mid/small-caps like CWCO add growth. Sector focus on utilities reduces correlation, with average Quality rating ~6.9, blended ROIC strength, and international exposure (KEP, SBS) balancing U.S. names. Pair high-growth (SBS, CWCO) with steady cash generators (DUK, CPK) for balanced investment opportunities.
Market Timing & Entry Strategies
Consider positions during utility sector dips, such as post-rate hikes or energy transitions, targeting entries below intrinsic value thresholds (e.g., DUK under $176.7). Use ValueSense screeners for real-time monitoring; dollar-cost average into high-conviction names like CWCO amid growth surges. Watch Q4 earnings for catalysts, favoring 5-10% portfolio allocation phased over 3-6 months for risk management.
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FAQ Section
How were these stocks selected?
These 9 best utility stocks were screened via ValueSense for Quality ratings above 6.5, strong intrinsic value upside, positive ROIC, and FCF margins over 1.5%, focusing on undervalued high-quality utilities.
What's the best stock from this list?
CWCO leads with Quality rating 7.7, extreme growth (84,356,440.2% revenue), and top 1Y Return 34.8%, though DUK offers scale for conservative analysis.
Should I buy all these stocks or diversify?
Diversify across large (DUK), mid (SBS), and small-caps (CWCO) for balanced stock picks, allocating by risk tolerance rather than equal-weighting all nine.
What are the biggest risks with these picks?
Key concerns include high leverage (BIPC 613.6%, DTG 208.0%), growth volatility (CWCO extremes), regulatory shifts, and international exposures (KEP, SBS).
When is the best time to invest in these stocks?
Monitor for pullbacks below intrinsic values, energy policy changes, or sector rotations; use ValueSense backtesting for historical entry patterns.