10 Best Utilities for February 2026
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Market Overview & Selection Criteria
The utility sector offers stability amid market volatility, with steady demand for energy driving consistent revenue streams. These top utility stock picks were selected using ValueSense's proprietary methodology, focusing on intrinsic value comparisons, quality ratings, ROIC, revenue growth, and FCF margins to identify undervalued opportunities in power generation, transmission, and distribution. Stocks highlight a mix of high ROIC, positive growth trajectories, and favorable debt profiles, ideal for value-oriented watchlists targeting long-term portfolio resilience.
Featured Stock Analysis
Stock #1: GE Vernova Inc. (GEV)
| Metric | Value |
|---|---|
| Market Cap | $198.1B |
| Quality Rating | 6.2 |
| Intrinsic Value | $217.2 |
| 1Y Return | 89.9% |
| Revenue | $38.1B |
| Free Cash Flow | ($325.0M) |
| Revenue Growth | 8.9% |
| FCF margin | (0.9%) |
| Gross margin | 19.8% |
| ROIC | 8.8% |
| Total Debt to Equity | 0.0% |
Investment Thesis
GE Vernova Inc. (GEV) stands out with a Quality rating of 6.2 and an intrinsic value of $217.2, suggesting significant upside potential for value investors analyzing large-cap utilities. The company boasts a massive $198.1B market cap and impressive 89.9% 1Y return, fueled by $38.1B revenue and 8.9% revenue growth. Despite a negative FCF of $325.0M and -0.9% FCF margin, strengths like 19.8% gross margin, 8.8% ROIC, and 0.0% total debt to equity position GEV as a low-risk growth play in energy infrastructure, appealing for diversified utility stock picks.
This analysis reveals GEV's balanced fundamentals, with high returns and zero debt enabling aggressive expansion in renewables and grid tech, making it a top contender in undervalued utility stocks.
Key Catalysts
- Exceptional 89.9% 1Y return signals strong market momentum and investor confidence.
- 8.9% revenue growth supports scalable operations in high-demand energy sectors.
- 8.8% ROIC indicates efficient capital deployment for future expansion.
- 0.0% debt to equity provides financial flexibility amid rising interest rates.
Risk Factors
- Negative FCF $325.0M and -0.9% FCF margin may pressure short-term liquidity.
- Lower 19.8% gross margin compared to peers could limit pricing power.
Stock #2: NextEra Energy, Inc. (NEE)
| Metric | Value |
|---|---|
| Market Cap | $178.0B |
| Quality Rating | 5.7 |
| Intrinsic Value | $48.1 |
| 1Y Return | 24.3% |
| Revenue | $27.5B |
| Free Cash Flow | ($9,639.0M) |
| Revenue Growth | 10.8% |
| FCF margin | (35.1%) |
| Gross margin | 43.6% |
| ROIC | 5.6% |
| Total Debt to Equity | 143.8% |
Investment Thesis
NextEra Energy, Inc. (NEE) features a 5.7 Quality rating and $48.1 intrinsic value against a $178.0B market cap, highlighting value in renewables leadership despite 24.3% 1Y return. With $27.5B revenue and robust 10.8% revenue growth, offset by $9,639.0M FCF and -35.1% FCF margin, the 43.6% gross margin, 5.6% ROIC, and 143.8% debt to equity reflect a capital-intensive model focused on long-term clean energy transitions. This positions NEE as a key pick for best utility stocks seeking growth in sustainable power.
NEE's profile suits investors eyeing investment opportunities in utilities with high growth potential, balanced by sector-typical leverage.
Key Catalysts
- Strong 10.8% revenue growth driven by renewable energy demand.
- High 43.6% gross margin underscores operational efficiency.
- 24.3% 1Y return demonstrates resilience in volatile markets.
Risk Factors
- Significant $9,639.0M FCF and -35.1% margin indicate heavy reinvestment needs.
- Elevated 143.8% debt to equity heightens sensitivity to rate changes.
Stock #3: The Southern Company (SO)
| Metric | Value |
|---|---|
| Market Cap | $97.5B |
| Quality Rating | 6.5 |
| Intrinsic Value | $65.9 |
| 1Y Return | 6.0% |
| Revenue | $28.9B |
| Free Cash Flow | $1,392.0M |
| Revenue Growth | 9.4% |
| FCF margin | 4.8% |
| Gross margin | 55.3% |
| ROIC | 10.9% |
| Total Debt to Equity | (57.6%) |
Investment Thesis
The Southern Company (SO) earns a top 6.5 Quality rating with $65.9 intrinsic value and $97.5B market cap, offering stability via $28.9B revenue, 9.4% growth, and positive $1,392.0M FCF at 4.8% margin. Boasting 55.3% gross margin and 10.9% ROIC, despite -57.6% debt to equity, SO's 6.0% 1Y return makes it a defensive choice in utility stock watchlists for income-focused analysis.
Superior margins and ROIC highlight SO's edge in regulated markets, ideal for value stocks portfolios.
Key Catalysts
- Positive $1,392.0M FCF and 4.8% margin support dividends and growth.
- Leading 10.9% ROIC and 55.3% gross margin for profitability.
- Steady 9.4% revenue growth in core utility operations.
Risk Factors
- Negative -57.6% debt to equity requires monitoring leverage.
- Modest 6.0% 1Y return trails high-growth peers.
Stock #4: Duke Energy Corporation (DUK)
| Metric | Value |
|---|---|
| Market Cap | $93.8B |
| Quality Rating | 6.6 |
| Intrinsic Value | $188.7 |
| 1Y Return | 9.1% |
| 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) scores a high 6.6 Quality rating with $188.7 intrinsic value far exceeding market pricing, backed by $93.8B market cap, $31.7B revenue, and exceptional $8,960.0M FCF at 28.3% margin. 4.8% revenue growth, 69.9% gross margin, 5.2% ROIC, and 19.7% debt to equity yield 9.1% 1Y return, positioning DUK as a premium undervalued utility stock for balanced exposure.
DUK's cash generation strength appeals to those screening for high FCF margin utilities.
Key Catalysts
- Outstanding 28.3% FCF margin and $8,960.0M FCF for reinvestment.
- Top 69.9% gross margin reflects cost control.
- 6.6 Quality rating signals robust fundamentals.
Risk Factors
- Lower 5.2% ROIC suggests capital efficiency room for improvement.
- 4.8% revenue growth lags sector leaders.
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Stock #5: Constellation Energy Corporation (CEG)
| Metric | Value |
|---|---|
| Market Cap | $88.8B |
| Quality Rating | 6.1 |
| Intrinsic Value | $251.9 |
| 1Y Return | -8.9% |
| Revenue | $24.8B |
| Free Cash Flow | ($276.0M) |
| Revenue Growth | 8.9% |
| FCF margin | (1.1%) |
| Gross margin | 75.2% |
| ROIC | 21.3% |
| Total Debt to Equity | (24.4%) |
Investment Thesis
Constellation Energy Corporation (CEG) holds a 6.1 Quality rating and standout $251.9 intrinsic value with $88.8B market cap. Despite -8.9% 1Y return, $24.8B revenue, 8.9% growth, 75.2% gross margin, and 21.3% ROIC offset $276.0M FCF and -1.1% margin, with -24.4% debt to equity. CEG excels in nuclear/clean energy for top utility picks.
High ROIC makes CEG a growth outlier in value investing screens.
Key Catalysts
- Exceptional 21.3% ROIC for superior returns on capital.
- 75.2% gross margin and 8.9% revenue growth.
- Strong intrinsic value upside potential.
Risk Factors
- Negative -8.9% 1Y return and $276.0M FCF.
- -1.1% FCF margin signals cash flow challenges.
Stock #6: National Grid plc (NGG)
| Metric | Value |
|---|---|
| Market Cap | $83.5B |
| Quality Rating | 6.1 |
| Intrinsic Value | $158.2 |
| 1Y Return | 38.1% |
| 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) rates 6.1 Quality with $158.2 intrinsic value and $83.5B market cap. £36.8B revenue faces -11.6% growth and £2,406.0M FCF at -6.5% margin, but 78.8% gross margin, 8.4% ROIC, and 38.1% 1Y return with 123.4% debt to equity suit global transmission analysis in utility watchlists.
NGG's margins shine despite growth dip, for international diversification.
Key Catalysts
- Impressive 78.8% gross margin and 38.1% 1Y return.
- Solid 8.4% ROIC in infrastructure.
- High intrinsic value for long-term appeal.
Risk Factors
- -11.6% revenue growth and negative FCF.
- High 123.4% debt to equity.
Stock #7: American Electric Power Company, Inc. (AEP)
| Metric | Value |
|---|---|
| Market Cap | $63.4B |
| Quality Rating | 6.3 |
| Intrinsic Value | $180.3 |
| 1Y Return | 23.3% |
| Revenue | $21.4B |
| Free Cash Flow | $2,165.5M |
| Revenue Growth | 9.3% |
| FCF margin | 10.1% |
| Gross margin | 44.4% |
| ROIC | 6.1% |
| Total Debt to Equity | 8.7% |
Investment Thesis
American Electric Power Company, Inc. (AEP) scores 6.3 Quality with $180.3 intrinsic value and $63.4B market cap. $21.4B revenue, 9.3% growth, $2,165.5M FCF at 10.1% margin, 44.4% gross margin, 6.1% ROIC, and low 8.7% debt to equity drive 23.3% 1Y return, ideal for best value utilities.
Positive FCF and low debt enhance AEP's profile.
Key Catalysts
- Strong $2,165.5M FCF and 10.1% margin.
- 23.3% 1Y return with 9.3% revenue growth.
- Conservative 8.7% debt to equity.
Risk Factors
- Moderate 6.1% ROIC.
- 44.4% gross margin below top peers.
Stock #8: Sempra (SRE)
| Metric | Value |
|---|---|
| Market Cap | $56.6B |
| Quality Rating | 5.8 |
| Intrinsic Value | $62.4 |
| 1Y Return | 4.5% |
| Revenue | $13.7B |
| Free Cash Flow | ($4,910.0M) |
| Revenue Growth | 8.4% |
| FCF margin | (35.7%) |
| Gross margin | 34.1% |
| ROIC | 5.2% |
| Total Debt to Equity | (40.2%) |
Investment Thesis
Sempra (SRE) has 5.8 Quality rating and $62.4 intrinsic value with $56.6B market cap. $13.7B revenue, 8.4% growth, but $4,910.0M FCF and -35.7% margin, 34.1% gross margin, 5.2% ROIC, -40.2% debt to equity, and 4.5% 1Y return offer diversified utility exposure.
SRE fits stock picks with growth amid capex.
Key Catalysts
- Consistent 8.4% revenue growth.
- Negative debt provides balance sheet strength.
- Intrinsic value suggests undervaluation.
Risk Factors
- Heavy -35.7% FCF margin.
- Lower 5.2% ROIC and 34.1% gross margin.
Stock #9: Vistra Corp. (VST)
| Metric | Value |
|---|---|
| Market Cap | $54.2B |
| Quality Rating | 6.2 |
| Intrinsic Value | $119.0 |
| 1Y Return | -10.2% |
| 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) rates 6.2 Quality with $119.0 intrinsic value and $54.2B market cap. $4,037.0M revenue shows -75.2% growth but $2,381.0M FCF at 59.0% margin, 39.6% gross margin, 5.0% ROIC, 0.0% debt, despite -10.2% 1Y return—strong for power generation analysis.
High FCF margin offsets revenue volatility.
Key Catalysts
- Exceptional 59.0% FCF margin and positive FCF.
- 0.0% debt to equity.
- Upside to intrinsic value.
Risk Factors
- Sharp -75.2% revenue growth.
- -10.2% 1Y return.
Stock #10: Dominion Energy, Inc. (D)
| Metric | Value |
|---|---|
| Market Cap | $51.2B |
| Quality Rating | 6.0 |
| Intrinsic Value | $51.1 |
| 1Y Return | 9.1% |
| Revenue | $15.8B |
| Free Cash Flow | ($7,719.0M) |
| Revenue Growth | 8.4% |
| FCF margin | (48.8%) |
| Gross margin | 50.6% |
| ROIC | 4.4% |
| Total Debt to Equity | 153.0% |
Investment Thesis
Dominion Energy, Inc. (D) features 6.0 Quality near $51.1 intrinsic value with $51.2B market cap. $15.8B revenue, 8.4% growth, 50.6% gross margin, 4.4% ROIC, but $7,719.0M FCF and -48.8% margin, 153.0% debt, 9.1% 1Y return suit regulated utility plays.
Balanced growth with margin strength.
Key Catalysts
- Solid 8.4% revenue growth and 50.6% gross margin.
- 9.1% 1Y return stability.
- Quality rating supports watchlist inclusion.
Risk Factors
- Poor -48.8% FCF margin.
- High 153.0% debt to equity.
Portfolio Diversification Insights
These 10 utility stock picks cluster in power generation (GEV, CEG, VST) and transmission/distribution (NEE, SO, DUK), with 70% U.S.-focused large-caps over $50B market cap for stability. High-ROIC names like CEG 21.3% complement FCF-strong DUK (28.3% margin), reducing sector risk via low-debt options (GEV, VST at 0.0%). Allocation: 40% generation, 50% regulated utilities, 10% international (NGG) enhances resilience against energy transitions.
Market Timing & Entry Strategies
Consider entry on dips below intrinsic values (e.g., DUK at $188.7, CEG at $251.9), monitoring Q1 2026 earnings for revenue growth confirmation. Dollar-cost average into high-quality ratings (>6.0 like DUK, SO) during rate pauses; pair with macro screens for ROIC >8% amid demand surges.
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FAQ Section
How were these stocks selected?
Selected via ValueSense criteria emphasizing intrinsic value upside, Quality ratings above 5.7, ROIC, FCF margins, and utility sector relevance for diversified stock watchlists.
What's the best stock from this list?
Duke Energy (DUK) leads with 6.6 Quality, 28.3% FCF margin, and $188.7 intrinsic value, ideal for balanced utility analysis.
Should I buy all these stocks or diversify?
Diversify across generation (GEV, CEG) and regulated (SO, DUK) for risk mitigation, using 10-20% portfolio allocation per investment opportunities screen.
What are the biggest risks with these picks?
Negative FCF in NEE/SRE/D and high debt (NEE 143.8%, D 153.0%) amid rate hikes; revenue volatility in VST -75.2%.
When is the best time to invest in these stocks?
Target entries when prices trail intrinsic values, post-earnings validation of growth (e.g., 8-10% revenue), during stable energy demand cycles.