10 Best Utilities for December 2025
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Market Overview & Selection Criteria
The utilities sector continues to attract investor attention in 2025, driven by stable cash flows, resilient demand, and the ongoing transition to clean energy. As interest rates stabilize and inflation moderates, utility stocks offer a compelling mix of defensive characteristics and growth potential. ValueSense’s stock selection methodology leverages proprietary quality ratings, intrinsic value calculations, and robust financial metrics to identify companies trading below their fair value. Our featured picks are drawn from a curated watchlist of large-cap utilities with strong balance sheets, consistent revenue, and attractive dividend profiles. Each stock is evaluated for quality, growth, profitability, and financial health, ensuring a balanced and diversified approach to sector investing.
Featured Stock Analysis
Stock #1: NextEra Energy, Inc. (NEE)
| Metric | Value |
|---|---|
| Market Cap | $177.4B |
| Quality Rating | 6.5 |
| Intrinsic Value | $37.7 |
| 1Y Return | 10.6% |
| Revenue | $26.3B |
| Free Cash Flow | $10.1B |
| Revenue Growth | 0.0% |
| FCF margin | 38.5% |
| Gross margin | 62.6% |
| ROIC | 5.4% |
| Total Debt to Equity | 149.7% |
Investment Thesis
NextEra Energy, Inc. (NEE) stands out as a leading utility with a market cap of $177.4 billion and a ValueSense quality rating of 6.5. The company’s intrinsic value is estimated at $37.7, suggesting potential upside for investors. NEE reported $26.3 billion in revenue and generated $10.1 billion in free cash flow, reflecting strong operational efficiency. The company’s gross margin of 62.6% and FCF margin of 38.5% highlight its ability to convert revenue into cash. With a ROIC of 5.4%, NEE demonstrates solid returns on invested capital, though its total debt to equity ratio of 149.7% is a consideration for risk-averse investors.
Key Catalysts
- Expansion in renewable energy projects
- Stable regulatory environment
- Strong cash flow generation
Risk Factors
- High debt-to-equity ratio
- Regulatory and policy risks
- Exposure to commodity price fluctuations
Stock #2: GE Vernova Inc. (GEV)
| Metric | Value |
|---|---|
| Market Cap | $161.3B |
| Quality Rating | 6.1 |
| Intrinsic Value | $209.4 |
| 1Y Return | 79.9% |
| Revenue | $37.7B |
| Free Cash Flow | ($1,563.0M) |
| Revenue Growth | 9.4% |
| FCF margin | (4.1%) |
| Gross margin | 19.5% |
| ROIC | 0.7% |
| Total Debt to Equity | 0.0% |
Investment Thesis
GE Vernova Inc. (GEV) is a major player in the energy sector with a market cap of $161.3 billion and a ValueSense quality rating of 6.1. The company’s intrinsic value is $209.4, indicating potential undervaluation. GEV posted $37.7 billion in revenue and achieved a revenue growth rate of 9.4%. However, its free cash flow was negative at ($1,563.0 million), and its FCF margin was 4.1%, reflecting ongoing investment in growth initiatives. The company’s ROIC of 0.7% is low, but its total debt to equity ratio is 0.0%, signaling a strong balance sheet.
Key Catalysts
- Focus on sustainable energy solutions
- Strong revenue growth
- Zero debt leverage
Risk Factors
- Negative free cash flow
- Low return on invested capital
- Competitive pressures in the energy sector
Stock #3: Constellation Energy Corporation (CEG)
| Metric | Value |
|---|---|
| Market Cap | $114.4B |
| Quality Rating | 6.3 |
| Intrinsic Value | $253.5 |
| 1Y Return | 42.3% |
| Revenue | $25.5B |
| Free Cash Flow | ($276.0M) |
| Revenue Growth | 11.6% |
| FCF margin | (1.1%) |
| Gross margin | 29.7% |
| ROIC | 12.2% |
| Total Debt to Equity | 61.5% |
Investment Thesis
Constellation Energy Corporation (CEG) boasts a market cap of $114.4 billion and a ValueSense quality rating of 6.3. The company’s intrinsic value is $253.5, suggesting significant upside potential. CEG reported $25.5 billion in revenue and achieved a revenue growth rate of 11.6%. Its ROIC of 12.2% is among the highest in the sector, indicating efficient capital allocation. However, free cash flow was negative at ($276.0 million), and the FCF margin was 1.1%, reflecting ongoing investment in growth.
Key Catalysts
- High return on invested capital
- Strong revenue growth
- Leadership in clean energy
Risk Factors
- Negative free cash flow
- Exposure to regulatory changes
- Competitive landscape
Stock #4: The Southern Company (SO)
| Metric | Value |
|---|---|
| Market Cap | $100.1B |
| Quality Rating | 6.4 |
| Intrinsic Value | $62.3 |
| 1Y Return | 3.1% |
| Revenue | $28.9B |
| Free Cash Flow | $1,392.0M |
| Revenue Growth | 9.4% |
| FCF margin | 4.8% |
| Gross margin | 49.1% |
| ROIC | 10.9% |
| Total Debt to Equity | (57.6%) |
Investment Thesis
The Southern Company (SO) is a well-established utility with a market cap of $100.1 billion and a ValueSense quality rating of 6.4. The company’s intrinsic value is $62.3, indicating potential undervaluation. SO reported $28.9 billion in revenue and generated $1,392.0 million in free cash flow. Its ROIC of 10.9% reflects strong capital efficiency, and its total debt to equity ratio is 57.6%, signaling a healthy balance sheet.
Key Catalysts
- Stable cash flow generation
- Strong return on invested capital
- Regulatory support
Risk Factors
- Moderate revenue growth
- Exposure to regulatory risks
- Competitive pressures
Stock #5: Duke Energy Corporation (DUK)
| Metric | Value |
|---|---|
| Market Cap | $96.2B |
| Quality Rating | 6.8 |
| Intrinsic Value | $90.9 |
| 1Y Return | 6.9% |
| Revenue | $31.8B |
| Free Cash Flow | $8,960.0M |
| Revenue Growth | 5.2% |
| FCF margin | 28.2% |
| Gross margin | 70.0% |
| ROIC | 5.3% |
| Total Debt to Equity | 169.6% |
Investment Thesis
Duke Energy Corporation (DUK) is a leading utility with a market cap of $96.2 billion and a ValueSense quality rating of 6.8. The company’s intrinsic value is $90.9, suggesting potential upside. DUK reported $31.8 billion in revenue and generated $8,960.0 million in free cash flow. Its FCF margin of 28.2% and gross margin of 70.0% highlight strong profitability. The ROIC of 5.3% is solid, but the total debt to equity ratio of 169.6% is a consideration.
Key Catalysts
- Strong cash flow generation
- High profitability
- Leadership in regulated utilities
Risk Factors
- High debt-to-equity ratio
- Regulatory risks
- Exposure to commodity price fluctuations
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Stock #6: National Grid plc (NGG)
| Metric | Value |
|---|---|
| Market Cap | $75.1B |
| Quality Rating | 6.0 |
| Intrinsic Value | $171.8 |
| 1Y Return | 19.5% |
| Revenue | £36.8B |
| Free Cash Flow | (£2,406.0M) |
| Revenue Growth | (11.6%) |
| FCF margin | (6.5%) |
| Gross margin | 78.8% |
| ROIC | 8.4% |
| Total Debt to Equity | 123.4% |
Investment Thesis
National Grid plc (NGG) is a major utility with a market cap of $75.1 billion and a ValueSense quality rating of 6.0. The company’s intrinsic value is $171.8, indicating potential undervaluation. NGG reported £36.8 billion in revenue and achieved a 19.5% one-year return. However, free cash flow was negative at (£2,406.0 million), and the FCF margin was 6.5%, reflecting ongoing investment in infrastructure.
Key Catalysts
- Strong revenue base
- Leadership in energy infrastructure
- Regulatory support
Risk Factors
- Negative free cash flow
- Exposure to regulatory changes
- Currency risk
Stock #7: American Electric Power Company, Inc. (AEP)
| Metric | Value |
|---|---|
| Market Cap | $66.0B |
| Quality Rating | 6.7 |
| Intrinsic Value | $7,301.7 |
| 1Y Return | 25.1% |
| Revenue | $6,025.8B |
| Free Cash Flow | $2,165.5M |
| Revenue Growth | 30,640.5% |
| FCF margin | 0.0% |
| Gross margin | 0.1% |
| ROIC | 1,555.0% |
| Total Debt to Equity | 8.7% |
Investment Thesis
American Electric Power Company, Inc. (AEP) is a large utility with a market cap of $66.0 billion and a ValueSense quality rating of 6.7. The company’s intrinsic value is $7,301.7, suggesting significant upside potential. AEP reported $6,025.8 billion in revenue and achieved a remarkable revenue growth rate of 30,640.5%. Its ROIC of 1,555.0% is exceptionally high, reflecting efficient capital allocation.
Key Catalysts
- Exceptional revenue growth
- High return on invested capital
- Strong balance sheet
Risk Factors
- Data anomaly in revenue growth
- Regulatory risks
- Competitive pressures
Stock #8: Sempra (SRE)
| Metric | Value |
|---|---|
| Market Cap | $61.8B |
| Quality Rating | 5.5 |
| Intrinsic Value | $63.7 |
| 1Y Return | 1.8% |
| Revenue | $13.7B |
| Free Cash Flow | ($2,349.0M) |
| Revenue Growth | 8.2% |
| FCF margin | (17.1%) |
| Gross margin | 39.8% |
| ROIC | 4.9% |
| Total Debt to Equity | 16.0% |
Investment Thesis
Sempra (SRE) is a leading utility with a market cap of $61.8 billion and a ValueSense quality rating of 5.5. The company’s intrinsic value is $63.7, indicating potential undervaluation. SRE reported $13.7 billion in revenue and achieved a revenue growth rate of 8.2%. However, free cash flow was negative at ($2,349.0 million), and the FCF margin was 17.1%, reflecting ongoing investment in growth.
Key Catalysts
- Strong revenue growth
- Leadership in energy infrastructure
- Regulatory support
Risk Factors
- Negative free cash flow
- Regulatory risks
- Competitive pressures
Stock #9: Vistra Corp. (VST)
| Metric | Value |
|---|---|
| Market Cap | $61.2B |
| Quality Rating | 6.3 |
| Intrinsic Value | $81.3 |
| 1Y Return | 12.1% |
| Revenue | $4,037.0M |
| Free Cash Flow | $2,381.0M |
| Revenue Growth | (75.2%) |
| FCF margin | 59.0% |
| Gross margin | 39.6% |
| ROIC | 5.0% |
| Total Debt to Equity | 0.0% |
Investment Thesis
Vistra Corp. (VST) is a major utility with a market cap of $61.2 billion and a ValueSense quality rating of 6.3. The company’s intrinsic value is $81.3, suggesting potential upside. VST reported $4,037.0 million in revenue and generated $2,381.0 million in free cash flow. Its FCF margin of 59.0% is among the highest in the sector, reflecting strong cash flow generation.
Key Catalysts
- High free cash flow margin
- Strong cash flow generation
- Leadership in energy infrastructure
Risk Factors
- Negative revenue growth
- Regulatory risks
- Competitive pressures
Stock #10: Dominion Energy, Inc. (D)
| Metric | Value |
|---|---|
| Market Cap | $53.5B |
| Quality Rating | 5.2 |
| Intrinsic Value | $64.8 |
| 1Y Return | 8.1% |
| Revenue | $15.8B |
| Free Cash Flow | ($1,504.0M) |
| Revenue Growth | 8.4% |
| FCF margin | (9.5%) |
| Gross margin | 34.7% |
| ROIC | 9.1% |
| Total Debt to Equity | (47.3%) |
Investment Thesis
Dominion Energy, Inc. (D) is a leading utility with a market cap of $53.5 billion and a ValueSense quality rating of 5.2. The company’s intrinsic value is $64.8, indicating potential undervaluation. D reported $15.8 billion in revenue and achieved a revenue growth rate of 8.4%. However, free cash flow was negative at ($1,504.0 million), and the FCF margin was 9.5%, reflecting ongoing investment in growth.
Key Catalysts
- Strong revenue growth
- Leadership in energy infrastructure
- Regulatory support
Risk Factors
- Negative free cash flow
- Regulatory risks
- Competitive pressures
Portfolio Diversification Insights
The featured utilities stocks offer a well-diversified portfolio with exposure to various sub-sectors, including renewable energy, regulated utilities, and energy infrastructure. By combining companies with strong cash flows, high returns on invested capital, and attractive dividend profiles, investors can achieve a balanced and resilient portfolio. The sector’s defensive characteristics provide a hedge against market volatility, while the focus on clean energy and infrastructure offers long-term growth potential.
Market Timing & Entry Strategies
Investors should consider entering positions in these utilities stocks during periods of market volatility or when sector valuations are attractive. Dollar-cost averaging and periodic rebalancing can help mitigate timing risks and ensure a disciplined investment approach. Monitoring regulatory developments, interest rate trends, and sector-specific catalysts will provide valuable insights for optimizing entry and exit strategies.
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FAQ Section
Q: How were these stocks selected?
A: These stocks were selected based on ValueSense’s proprietary quality ratings, intrinsic value calculations, and robust financial metrics, focusing on large-cap utilities with strong balance sheets and attractive dividend profiles.
Q: What's the best stock from this list?
A: The best stock depends on individual investment goals and risk tolerance. NextEra Energy (NEE) and Constellation Energy (CEG) stand out for their strong cash flows and high returns on invested capital.
Q: Should I buy all these stocks or diversify?
A: Diversification is recommended to spread risk across multiple companies and sub-sectors. Consider allocating investments based on individual risk tolerance and sector outlook.
Q: What are the biggest risks with these picks?
A: Key risks include regulatory changes, exposure to commodity price fluctuations, and competitive pressures. Negative free cash flow and high debt-to-equity ratios are also considerations for some companies.
Q: When is the best time to invest in these stocks?
A: The best time to invest is during periods of market volatility or when sector valuations are attractive. Dollar-cost averaging and periodic rebalancing can help optimize entry and exit strategies.