The largest electric holding company in the U.S., NextEra Energy (NYSE: NEE), is getting bigger. With over 5.7M customers, NextEra Energy is a giant. Yet NEE stock lags its peers this year.
The Utilities Select Sector SPDR Fund (NYSE: XLU) is down 5% this year, while NEE stock is down 18%. Utility stocks are often seen as a safer place to put money when the market falls. For one thing, electricity is necessary. Therefore, electric companies make steady cash flow and pay generous dividends.
Furthermore, NextEra Energy is a leader in clean energy. They generate the most solar and wind globally. The energy firm is also a powerhouse in battery storage.
The company is targeting cleaner, cheaper electricity for customers. As clean energy projects unfold, NextEra Energy is raising guidance going forward.
With NEE stock down over 18% this year, is now the time to buy? Here are four reasons to watch NextEra Energy stock this year.
No. 4 A Tale of Two Companies
NextEra Energy is the holding company of two successful energy companies. With 61 GW of energy potential and $145 billion in total assets, NEE is an industry leader.
- Florida Power & Light Company (FPL): The largest U.S. electric utility company.
- NextEra Energy Resources: The global leader in wind and solar electricity generation.
Both companies are focusing on low-cost, clean energy solutions. FPL currently holds the U. S.’s largest solar portfolio. With this in mind, it’s widely viewed as a top utility business.
For example, in 2021, FPL’s rates were 66% lower than the average. NextEra has an advantage with the clean energy portfolio it’s built over the past 30 years.
Energy Resources is the largest solar and wind energy generator in America. The company also leads the U.S. energy storage market.
Lastly, to lower costs, the company uses data analytics. NextEra can then find the best places for superior energy generation. As a result, the process helps lower costs while funding growth.
No. 3 Why Is NEE Stock Down?
With the largest clean energy portfolio, how is NEE stock down this year? Energy is more important than ever, and prices just hit a record high.
For one thing, investors disliked the news of longtime CEO Jim Robo stepping down. The company is filling the role with 19-year veteran John Ketchum.
Mr. Robo grew NextEra Energy to new heights, expanding the company to 49 states and Canada. Moreover, he grew NEE to become a top-five U.S. investor. The strategy is paying off as clean energy becomes a priority.
After the news, NEE stock fell on heavy volume. To illustrate, NEE stock averages around 9.8 million shares traded per day.
- January 25, the day of the announcement, NEE stock saw volume increase over 130% to 22.9 million.
- January 26, the day after, NEE shares traded over 24.7 million.
As a result, NextEra Energy stock fell over $10, or 11%, in two days. At the same time, the stock market is down in 2022. All major indexes are down, and energy stocks are the only sector green so far.
Although NextEra Energy produces energy, it’s viewed as a utility. And finally, the company sees losses from project delays and hedging this year.
Keep reading to see why NEE stock is worth watching in 2022.
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NEE Stock Forecast: What’s Next for NextEra Energy Stock?
Even though the company is growing, the investments are costly. That said, NextEra has special lower interest rates until at least 2026.
The transition to renewable energy in the U.S. will be big for NextEra going forward. As the company rolls projects out, it continues gaining clean energy market share.
While the U.S. looking to hit its climate goals, NEE can play a major role. With clean energy options and battery storage, look for NextEra to benefit majorly.
With NEE stock down 18% this year, it can be a buying opportunity. But don’t expect explosive returns like a growth stock.
NEE stock is a good investment for those looking to build wealth in the long run. With a dividend yield over 2% and demand for clean energy rising, NEE stock looks to be a solid option in 2022.
Pete Johnson is an experienced financial writer and content creator who specializes in equity research and derivatives. He has over ten years of personal investing experience. Digging through 10-K forms and finding hidden gems is his favorite pastime. When Pete isn’t researching stocks or writing, you can find him enjoying the outdoors or working up a sweat exercising.
