The utility industry is thriving with the growing demand across various end-use sectors like electronics and automotive, backed by the increasing adoption of advanced technologies. Segments like data centers and the emergence of new consumer industries are leading to the highest electricity consumption.

With the industry’s promising prospects, it could be wise to invest in fundamentally sound utility stocks Vistra Corp. (VST), PPL Corporation (PPL), and American Electric Power Company, Inc. (AEP) with unexpected growth stories.

According to the U.S. Energy Information Administration Short-Term Energy Outlook, after no or relatively little change over the past two decades, electricity consumption is expected to grow by 2% in the current year and in 2026. This consumption surge is mainly due to increased demand from new semiconductor and battery manufacturing factories and data centers.

This electricity demand is powerfully navigating the utility industry. The industry’s bright prospects are driven by extensive electricity usage in a wide range of devices and equipment across multiple sectors like residential, automotive, corporate, and industrial processes. Furthermore, the growing adoption of advanced digital technologies will foster the sector’s growth.

The utilities market is expected to reach around $9.21 trillion by 2029, exhibiting solid growth at a CAGR of 6%. The market demand is attributable to factors like the integration of renewable energy sources, better load management, global population growth, technological advancements, and faster economic growth.

Amid this, stocks of utility companies that are continuously working towards catering to the growing energy demand through sound strategies and tactics are well-positioned for robust growth. Given these encouraging trends, let’s look at the fundamentals of the three best Utilities – Domestic stocks, beginning with the third choice.

Stock #3: Vistra Corp. (VST)

VST is an integrated retail electricity and power generation company. The company operates in six segments: Retail; Texas; East; West; Sunset; and Asset Closure. The company retails electricity and natural gas to residential, commercial, and industrial customers.

As a strategic expansion, on September 18, 2024, VST executed definitive agreements with affiliates of Nuveen Asset Management, LLC, and Avenue Capital Management II, L.P., and acquired their combined 15% equity interest in Vistra Vision LLC, resulting in VST becoming the sole owner of its Vistra Vision subsidiary, including its zero-carbon nuclear, energy storage, and solar generation assets.

The acquisition marked a milestone in VST’s evolution, simplifying its overall structure. With its integrated model, VST will serve its customers in a reliable, affordable, and sustainable manner.

On September 11, 2024, VST announced a new program for homeowners in partnership with Sunrun (RUN) to support grid reliability for Texans. The program will aggregate power stored in residential, solar-connected batteries, forming a virtual power plant to dispatch energy back to the grid as needed.

For the third quarter that ended September 30, 2024, VST reported operating revenues of $6.29 billion, up 53.9% year-over-year. The company’s operating income increased 210.3% from the previous year’s quarter to $2.59 billion. Its net income came in at $1.84 billion, indicating a growth of 265.9% from the prior year quarter.

As per the guidance for fiscal 2024, the company’s ongoing operations adjusted EBITDA, which is expected to range between $5 billion and $5.20 billion. Its ongoing operations adjusted FCFbG is likely to be between $2.65 billion and $2.85 billion.

The company also initiated 2025 guidance ranges, projecting ongoing operations adjusted EBITDA of $5.50 billion – $6.10 billion. It also expects ongoing operations adjusted FCFbG in the range of $3 billion to $3.60 billion.

Analysts expect VST’s revenue for the fourth quarter (ended December 2024) to improve 26.3% year-over-year to $3.89 billion. For the fiscal year (ended December 2024), the company’s revenue and EPS are expected to increase 16.5% and 97% from the prior year to $17.22 billion and $5.84, respectively.

VST’s stock has gained 124.2% over the past six months and 330.2% over the past year to close the last trading session at $170.86.

VST’s bright prospects are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

VST’s stock has a B grade for Growth and Momentum. Within the Utilities – Domestic industry, VST is ranked #32 of 58 stocks.

Click here to access additional ratings of VST (Stability, Value, Sentiment, and Quality).

Stock #2: PPL Corporation (PPL)

PPL is an energy company that emphasizes providing electricity and natural gas to approximately 3.6 million customers. The company operates through three segments: Kentucky Regulated; Pennsylvania Regulated; and Rhode Island Regulated.

On January 16, 2025, PPL’s subsidiary Louisville Gas and Electric Company announced its first hyperscale data center electric customer in partnership with Poe Companies and PowerHouse Data Centers. The cutting-edge 400-megawatt data center campus will be located in Louisville. The groundbreaking project will be historic for Kentucky and contribute to its new economic development.

On September 12, 2024, PPL executed an agreement with the U.S. Department of Energy (DOE) Office of Clean Energy Demonstrations (OCED) for an award of up to $72 million to help fund a groundbreaking carbon dioxide (CO₂) capture research and development project at the company’s natural gas combined-cycle generation facility in Louisville, Kentucky.

PPL’s operating revenues for the third quarter that ended September 30, 2024, increased 1.1% year-over-year to $2.07 billion, while its operating income was $428 million. The company’s net income and EPS were $214 million and $0.29 for the quarter, respectively.

In addition, PPL’s cash and cash equivalents as of September 30, 2024, were $542 million, compared to $331 million as of December 31, 2023.

Street expects PPL’s revenue for the fiscal year (ended December 2024) to increase 1.2% year-over-year to $8.41 billion. Likewise, the company’s EPS for the same year is expected to grow 6.7% year-over-year to $1.71. Moreover, PPL has surpassed the consensus revenue estimates in all four trailing quarters.

PPL’s shares have gained 15.8% over the past six months and 26.3% over the past year to close the last trading session at $33.25.

PPL’s sound fundamentals are reflected in its POWR Ratings. The stock has a B grade for Growth and Momentum. Within the Utilities – Domestic industry, PPL is ranked #27 of 58 stocks.

In addition to the POWR Ratings we’ve stated above, we also have PPL ratings for Sentiment, Value, Stability, and Quality. Get all PPL ratings here.

Stock #1: American Electric Power Company, Inc. (AEP)

AEP operates as an electric public utility holding company engaged in generating, transmitting, and distributing electricity for sale to retail and wholesale customers. It operates in Vertically Integrated Utilities; Transmission and Distribution Utilities; AEP Transmission Holdco; and Generation & Marketing segments.

On December 18, 2024, AEP’s subsidiary Southwestern Electric Power Co. (SWEPCO) announced various ongoing developments in several new generation projects pending regulatory approval. The company’s initiatives are designed to enhance its diverse energy portfolio to address the growing capacity demands of customers in a cost-effective manner.

SWEPCO’s new projects include the 450-MW Hallsville Natural Gas Plant and the 1,053-MW Welsh Natural Gas Conversion Project. It also has multiple renewable projects under construction. The company’s endeavors will provide a reliable energy supply to customers and cater to their evolving needs.

On November 14, AEP introduced its custom solution to support the growing energy needs with fuel cell technology for their large customers. AEP’s agreement in place will allow it to secure up to 1 gigawatt (GW) of Bloom Energy solid oxide fuel cells for data centers and other large energy users, making this the largest utility fuel cell technology initiative in the nation.

The company aims to invest $54 billion from 2025 through 2029 to enhance service for customers and support the growing energy needs of our communities. Such strong efforts will contribute to its ongoing growth and expansion.

During the third quarter that ended September 30, 2024, AEP’s total revenues increased 1.5% year-over-year to $5.42 billion, and its operating income came in at $1.35 billion for the same period. The company’s non-GAAP operating earnings stood at $985.40 million and $1.85 per share, up 6.7% and 4.5% over the prior year’s quarter, respectively.

Further, the company expects its operating earnings to range from $5.58 to $5.68 per share in 2024.

Analysts expect AEP’s revenue and EPS for the first quarter (ending March 2025) to increase 4% and 12.5% year-over-year to $5.20 billion and $1.43, respectively. Further, the company has topped consensus EPS estimates in three of the trailing four quarters.

Shares of AEP have surged 5.1% over the past month and 22% over the past year to close the last trading session at $97.25.

AEP’s POWR Ratings reflect this robust outlook. AEP has a B grade for Growth, Stability, and Momentum. The stock is ranked #8 among the 58 stocks in the Utilities – Domestic industry.

Click here to access additional AEP ratings for Sentiment, Value, and Quality.

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VST shares were trading at $170.86 per share on Monday afternoon, down $3.14 (-1.80%). Year-to-date, VST has gained 23.93%, versus a 1.96% rise in the benchmark S&P 500 index during the same period.

About the Author: Rjkumari Saxena

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions. More...

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