Defensive Sector with Growth PotentialSupporting Arguments
Current Market Uncertainty Sustains Demand for the Defensive Sector. NEE represents the defensive utility sector. Given the current political and economic uncertainty in the market, there could be an additional catalyst for the company's stock price growth.
Demand for Green Energy from the IT Sector. More than 80% of the company's portfolio consists of renewable energy sources (RES). Demand from data centers in the IT sector may allow the company to outperform competitors.
Attractive Valuation Levels and Technical Outlook
Investment Thesis
NextEra Energy (NEE) has strong long-term growth prospects due to the increasing demand for RES and the electrification of various sectors. Their integrated business model, combining the regulated utility business FPL and the competitive renewable energy business NEER, ensures both stability and growth opportunities. NEE's leadership in RES production, along with investments in battery energy storage and gas infrastructure, allows the company to benefit from the growing demand for clean energy solutions.
Current Market Uncertainty Could Drive Stock Price Growth. Tariffs imposed by the administration on imports and their potential impact on the U.S. economy remain in investors' focus. The market has responded to high uncertainty with a significant correction in overheated sectors, and pressure may persist for some time. As a representative of the utility sector, NEE benefits from uncertainty and may continue its growth.
Demand for Green Energy from the IT Sector. The largest public companies continue to increase capital expenditures on AI infrastructure to stay competitive. A key component of such infrastructure is data centers, which consume large amounts of energy and contribute to increased environmental pollution. As a result, data center owners create strong demand for companies that provide access to RES. More than 80% of the company’s portfolio consists of renewable energy sources. Already, the company’s annual profit growth rate is twice as high as that of its competitors.
Attractive Valuation Levels and Technical Outlook. The company's stock is trading at the 200-day moving average and recently rebounded from the resistance line at the 50-day moving average, which could serve as a strong catalyst for movement toward the previous peak of $84.8. Based on the forward PEG ratio, the company is trading at about the same level as companies engaged in traditional energy sources for household supply, while maintaining profitability 5-15% higher than competitors. Based on the forward P/E ratio, the company appears cheaper than its closest direct competitors (18x vs. 20.5x).
Our target price is $82, with a "Buy" recommendation. We recommend setting a stop-loss at $64
