American Electric Power Stock (NASDAQ: AEP)

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American Electric Power

American Electric Power is one of the largest regulated utilities in the United States, providing electricity generation, transmission, and distribution to more than 5 million customers in 11 states. About 42% of AEP's of capacity is coal, with the remainder from a mix of natural gas (27%), renewable energy and hydro (21%), nuclear (8%), and demand response (2%). Vertically integrated utilities, transmission and distribution, and generation and marketing support earnings.

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Analysts weigh in on Hurricane Milton&#39;s negative impact on different sectors and whether there could be buying opportunities for the long term.

Hurricane Milton Descends On Florida: Analysts Warn Of Impact On Disney, NextEra&#39;s Florida Power &amp; Light, Regional Banks

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Recent developments suggest that Amazon may be ramping up its interest in nuclear energy to fuel its growing needs.

Amazon Going Nuclear? Hiring Plans Indicate Company May Be Eyeing Nuclear To Meet Energy Needs

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Utilities sector surges in 2024, outpacing tech by 9 percentage points. Defensive stocks lead amid rising volatility and demand for data centers.

This Under-The-Radar Defensive AI Sector Quietly Outperforms All Others, Despite Receiving &#39;No Love&#39; From Investors

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Insurance, regional banks, fitness centers, utilities, hospitals and theme parks are among the sectors that could be negatively impacted when Hurricane Milton hits Florida Wednesday night or <a href="https://www.benzinga.com/news/24/10/41231817/hurricane-milton-dire-warning-if-you-choose-to-stay-youre-going-to-die-officials-encourage-writing-n">early </a><a href="https://www.benzinga.com/markets/equities/24/10/41209505/hurricane-milton-is-floridas-second-storm-in-two-weeks-how-disney-theme-parks-insurance-companie">Thursday </a><a href="https://www.benzinga.com/news/24/10/41231817/hurricane-milton-dire-warning-if-you-choose-to-stay-youre-going-to-die-officials-encourage-writing-n">morning.</a>
Here's a look at some of the sectors and stocks that investors should be watching with Hurricane Milton on the way.
Hurricane Milton Update: According <a href="https://www.nbcnews.com/news/weather/map-hurricane-milton-path-forecast-status-track-rcna174203">to </a>NBC News, <a href="https://www.benzinga.com/topic/hurricane-milton">Hurricane Milton was downgraded </a>to a Category 4 storm on Wednesday morning. The hurricane is expected to make landfall Wednesday night and could hit some of Florida&#8217;s most populous areas, including the Tampa Bay area.
Evacuation orders are in place for multiple Florida counties with government officials warning that failure to follow the orders could lead to casualties.
With evacuations taking place, Florida service stations are running out of gas, and there are concerns about charging electric vehicles on evacuation routes.
The constant changes in the storm's path could have a major effect on the damage and potential casualties. A landfall in the Tampa Bay area is seen as the worst-case scenario for the hurricane, as reported by <a href="https://www.cnn.com/weather/live-news/hurricane-milton-florida-10-09-24/index.html" target="_blank" rel="noopener">CNN</a>.
Read Also: <a href="https://www.benzinga.com/markets/equities/24/10/41239644/hurricane-milton-evacuations-a-matter-of-life-and-death-biden-says-feds-bostic-says-storm-could-">Hurricane Milton Evacuations &#8216;A Matter Of Life And Death,&#8217; Biden Says: Fed&#8217;s Bostic Says Storm Could Have Significant Economic Impact Over Next 6 Months</a>
Regional Banks: DA Davidson analyst Gary Tenner looked at the regional banks that could be most impacted by Hurricane Milton in a new investor note.
"Based on experience, we would expect the banks in the market to be impacted in multiple ways in the post-hurricane period, including a potential deposit boost related to insurance settlements, elevated near term expenses and provision, with lending opportunities related to rebuilding efforts,&#8221; Tenner said.
The analyst said banks in the Tampa and St. Petersburg areas could see near-term increased expenses but could see "positive offsets over the longer term."
Based on market share in the region, Tenner highlights the following regional banks:
<ul>
<li>Regions Financial (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RF#NYSE">RF</a>): Buy rating</li>
<li>Fifth Third Bancorp (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/FITB#NASDAQ">FITB</a>): Neutral rating</li>
<li>Synovus Financial Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SNV#NYSE">SNV</a>): Buy rating</li>
<li>SouthState Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SSB#NYSE">SSB</a>): Buy rating</li>
<li>Cadence Bank (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CADE#NYSE">CADE</a>): Buy rating</li>
<li>Hancock Whitney Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/HWC#NASDAQ">HWC</a>): Buy rating</li>
</ul>
Hospitals Impact: Hospital operators in the Florida region could be negatively impacted by Hurricane Milton and face IV shortages, RBC analyst Ben Hendrix said in a new investor note.
"Hospital operators traded slightly lower on Thursday, which we believe reflects at least in part weather-related concerns as Hurricane Milton moves toward Florida's west coast," Hendrix said.
The analyst said hospitals could see "some disruptions to facilities" in the coming days.
RBC highlights the following hospitals in the report:
<ul>
<li>Community Health Systems (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CYH#NYSE">CYH</a>): Outperform rating</li>
<li>HCA Healthcare (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HCA#NYSE">HCA</a>): Outperform rating</li>
<li>Tenet Healthcare (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/THC#NYSE">THC</a>): Outperform rating</li>
<li>Universal Health Services (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UHS#NYSE">UHS</a>): Sector Perform rating</li>
</ul>
"We believe HCA may be spared the worst of the storm damage with most of its hospital concentration in Central Florida located in the Tampa Bay area, which is north of the expected Sarasota landfall," Hendrix said.
Utilities Impact: Hurricane Milton could have a negative impact on utility stocks, Scotiabank analyst Andrew Weisel warned investors in a new note.
"While we remain bullish on U.S. utility fundamentals and valuations, we're growing somewhat cautious about investor sentiment, which had finally started to turn positive after years of negativity or indifference," Weisel said.
The analyst said they generally caution against trading around storms like Hurricane Milton.
"Rising hurricane activity is no doubt worrisome."
Weisel said the utility sector has several catalysts like rate cuts and the 2024 election, aside from the hurricane impact.
Top utility picks from Weisel are CMS Energy Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CMS#NYSE">CMS</a>), WEC Energy Group (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/WEC#NYSE">WEC</a>) and DTE Energy Company (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DTE#NYSE">DTE</a>). After these three top picks, the analyst highlights Southern Company (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SO#NYSE">SO</a>), NextEra Energy (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NEE#NYSE">NEE</a>), Alliant Energy Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/LNT#NASDAQ">LNT</a>) and American Electric Power Company (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AEP#NASDAQ">AEP</a>) as other favorable utility names. 
Weisel also said he would buy Duke Energy Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DUK#NYSE">DUK</a>) because of its weakness ahead of Hurricane Milton.
"While outages often lead to lost revenues, slightly weighing on near-term earnings, the impacts are generally very modest," Weisel said.
Another major utility that could be impacted by Hurricane Milton is Tampa Electric, owned by Emera Inc. (OTC:<a class="ticker" href="https://www.benzinga.com/stock/EMRAF#OTC">EMRAF</a>). Serving the Tampa Bay area, Tampa Electric is particularly vulnerable to the storm&#8217;s effects.
Insurance Stocks: The insurance sector is one of the sectors most on watch for the damaging impact and cleanup aftermath from Hurricane Milton.
Insurance stocks like Berkshire Hathaway (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BRK#NYSE">BRK</a>) (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BRK#NYSE">BRK</a>), Allstate (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ALL#NYSE">ALL</a>), Progressive (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PGR#NYSE">PGR</a>), Travelers Companies (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TRV#NYSE">TRV</a>) and Chubb (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CB#NYSE">CB</a>) are among the large insurers that could be impacted.
RBC analyst Derald Goh, who covers European insurance stocks, shared a note on the potential damage from the hurricane.
"A potential $60bn industry loss from Hurricane Milton appears very manageable for a sector that is keen to demonstrate stronger earnings resiliency and should drive a re-rating," Goh said.
The $60 billion estimate comes as Hurricane Milton is expected to cause destruction similar to that caused by Hurricane Ian in 2022. Based on the estimated damage from that storm, the analyst considers this estimate the most reliable method for predicting the impact on insurance companies.
Goh said five hurricanes have made landfall in the U.S. this season, and the previous average forecast was 12.
Leisure Sector: Hurricane Milton could also impact theme parks, with the state of Florida home to Disney World, owned by The Walt Disney Company (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIS#NYSE">DIS</a>), and Universal Studios Orlando, owned by Comcast Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/CMCSA#NASDAQ">CMCSA</a>).
Disney announced it is <a href="https://www.benzinga.com/markets/equities/24/10/41245886/disney-world-closes-early-as-hurricane-milton-approaches-florida-parks-brace-for-impact">closing Disney World parks early </a>on Wednesday and transportation services could remain limited, with a plan to re-open on Thursday. The storm may have scared away a large amount of tourists. Goldman Sachs recently said Disney could see a<a href="https://www.benzinga.com/general/entertainment/24/10/41229099/disney-faces-150m-200m-blow-from-hurricane-milton-attendance-set-to-drop-6-says-goldman-sac"> $150 million to $200 million</a> negative impact from Hurricane Milton.
Morgan Stanley analyst Megan Alexander sees Hurricane Milton having a negative impact on fitness centers Planet Fitness (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PLNT#NYSE">PLNT</a>) and Life Time Group Holdings (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LTH#NYSE">LTH</a>) and indoor golf facility company Topgolf Callaway Brands (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MODG#NYSE">MODG</a>).
"Overall, PLNT appears to be the most exposed across our coverage particularly given the concentration of corporate locations in the state," Alexander said.
The analyst, who has an Overweight rating and a $84 price target on Planet Fitness, said Florida represents around 25% of corporate-owned locations. Store closures could negatively impact new membership additions, but Alexander added that the monthly membership fee revenue model could insulate the company from a negative impact.
The analyst sees Life Time Group, rated Equal Weight with a $21 price target, having a minimal impact with only five locations in Florida, which is less than 3% of total locations.
Alexander said Topgolf has nine locations in Florida, with five currently closed due to Hurricane Milton. The analyst, who has an Underweight rating and a $10 price target on the stock, said Topgolf will likely see a minimal impact unless locations have severe storm damage and have to be closed for an extended time period.  
Read Next: 
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<li><a href="https://www.benzinga.com/news/24/10/41231817/hurricane-milton-dire-warning-if-you-choose-to-stay-youre-going-to-die-officials-encourage-writing-n">Hurricane Milton Dire Warning: &#8216;If You Choose To Stay &#8230; You&#8217;re Going To Die,&#8217; Officials Encourage Writing Name On Arm In Permanent Marker For ID</a></li>
</ul>
Image of Hurricane Milton courtesy of NASA.

Hurricane Milton Descends On Florida: Analysts Warn Of Impact On Disney, NextEra's Florida Power & Light, Regional Banks

BMO Capital analyst James Thalacker maintains American Electric Power (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AEP#NASDAQ">AEP</a>) with a Outperform and lowers the price target from $114 to $111.

BMO Capital Maintains Outperform on American Electric Power, Lowers Price Target to $111

American Electric Power's (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AEP#NYSE">AEP</a>) short percent of float has risen 10.2% since its last report. The company recently reported that it has 8.62 million shares sold short, which is 1.62% of all regular shares that are available for trading. Based on its trading volume, it would take traders 3.2 days to cover their short positions on average.
<h3>Why Short Interest Matters</h3>
Short interest is the number of shares that have been sold short but have not yet been covered or closed out. <a href="https://www.benzinga.com/money/how-to-short-a-stock/">Short selling</a> is when a trader sells shares of a company they do not own, with the hope that the price will fall. Traders make money from short selling if the price of the stock falls and they lose if it rises.
Short interest is important to track because it can act as an indicator of market sentiment towards a particular stock. An increase in short interest can signal that investors have become more bearish, while a decrease in short interest can signal they have become more bullish.
See Also: <a href="https://www.benzinga.com/short-interest">List of the most shorted stocks</a>
<h3>American Electric Power Short Interest Graph (3 Months)</h3>
<img src="https://www.benzinga.com/files/images/story/2024/1728047715_0.png" alt="short_fig" />
As you can see from the chart above the percentage of shares that are sold short for American Electric Power has grown since its last report. This does not mean that the stock is going to fall in the near-term but traders should be aware that more shares are being shorted.
<h3>Comparing American Electric Power's Short Interest Against Its Peers</h3>
Peer comparison is a popular technique amongst analysts and investors for gauging how well a company is performing. A company's peer is another company that has similar characteristics to it, such as industry, size, age, and financial structure. You can find a company's peer group by reading its 10-K, proxy filing, or by doing your own similarity analysis.
According to <a href="https://pro.benzinga.com/">Benzinga Pro</a>, American Electric Power's peer group average for short interest as a percentage of float is 2.21%, which means the company has less short interest than most of its peers.
Did you know that increasing short interest can actually be bullish for a stock? <a href="https://www.benzinga.com/money/how-to-make-money-on-a-short-squeeze/">This post by Benzinga Money explains how you can profit from it.</a>
This article was generated by Benzinga's automated content engine and was reviewed by an editor.

Short Sellers

Short Ideas

How Is The Market Feeling About American Electric Power?

BMO Capital analyst James Thalacker maintains American Electric Power (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AEP#NASDAQ">AEP</a>) with a Outperform and raises the price target from $109 to $114.

BMO Capital Maintains Outperform on American Electric Power, Raises Price Target to $114

Morgan Stanley analyst Stephen Byrd maintains American Electric Power (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AEP#NASDAQ">AEP</a>) with a Overweight and raises the price target from $102 to $108.

Morgan Stanley Maintains Overweight on American Electric Power, Raises Price Target to $108

Recent developments suggest that Amazon.com, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>) may be <a href="https://www.benzinga.com/markets/equities/24/07/39568237/tech-giants-eye-nuclear-power-to-fuel-ai-boom-raising-concerns-over-stability-and-environmental-" target="_blank" rel="noreferrer noopener">ramping up its interest in nuclear energy</a> to fuel its growing needs.
The tech giant has reposted a job <a target="_blank" href="https://www.linkedin.com/jobs/view/principal-nuclear-engineer-datacenter-engineering-power-generation-solutions-at-amazon-web-services-aws-4007936223" rel="noreferrer noopener">opening</a> for a Principal Nuclear Engineer in its Data Center Engineering division, raising questions about its long-term energy strategy.
Nano Nuclear Energy Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NNE#NASDAQ">NNE</a>), an emerging microreactor technology company, cited the opening in a social media <a href="https://x.com/nano_nuclear/status/1827024271731802146" target="_blank" rel="noreferrer noopener">post</a> on X, formerly Twitter.
Why This Is Important: The opening by Amazon comes shortly after Talen Energy agreed to sell a 960-megawatt data center campus to Amazon Web Services (AWS) for $650 million earlier this year, which includes a decade-long electricity supply agreement from the Susquehanna nuclear power station.
This particularly highlights Amazon&#8217;s commitment to clean, carbon-free energy sources.
An Amazon spokesperson <a href="https://www.ans.org/news/article-5842/amazon-buys-nuclearpowered-data-center-from-talen/" target="_blank" rel="noreferrer noopener">told the</a> American Nuclear Society, &#8220;To supplement our wind and solar energy projects, which depend on weather conditions to generate energy, we&#8217;re also exploring new innovations and technologies and investing in other sources of clean, carbon-free energy. This agreement with Talen Energy for carbon-free energy is one project in that effort.&#8221;
Also Read: <a href="https://www.benzinga.com/government/24/03/37627399/amazons-shot-at-nuclear-power-play-will-the-tech-giants-latest-move-redefine-green-energy-for-data-c" target="_blank" rel="noreferrer noopener">Amazon&#8217;s Shot At Nuclear Power Play &#8211; Will The Tech Giant&#8217;s Latest Move Redefine Green Energy for Data Centers?</a>
In a report <a href="https://www.aboutamazon.com/news/sustainability/amazon-renewable-energy-updates" target="_blank" rel="noreferrer noopener">released</a> on July 10, Amazon announced that it has achieved its goal of sourcing 100% of the electricity used across its global operations — including data centers, corporate offices, grocery stores, and fulfillment centers — from renewable energy, a target initially set for 2030. The company plans to continue investing in solar and wind projects while exploring nuclear power and battery storage to sustain its energy needs.
Why The Nuclear-Energy Interest May Be Controversial
Amazon&#8217;s nuclear ambitions are not without controversy.
Following the agreement with Talen Energy, utility companies American Electric Power Company, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AEP#NASDAQ">AEP</a>) and Exelon Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/EXC#NASDAQ">EXC</a>) formally objected to the Federal Energy Regulatory Commission (FERC), claiming that the electricity arrangement allows Amazon to benefit from the power grid without contributing to its maintenance costs, a <a href="https://www.ans.org/news/article-6180/aep-exelon-ask-ferc-to-scrutinize-amazontalen-data-center-deal/">report </a>by the American Nuclear Society suggests.
They argue this could lead to increased expenses for other PJM ratepayers, as the data center&#8217;s power usage is indirectly linked to the grid&#8217;s resources. PJM ratepayers are&nbsp;customers of the Pennsylvania-New Jersey-Maryland Interconnection (PJM).&nbsp;
That&#8217;s not all!
A March <a href="https://heatmap.news/technology/amazon-nuclear-talen-energy">report</a> by Heat Map suggests that a divide has emerged among tech giants regarding energy strategies, with Amazon focusing on securing low-cost power without prioritizing new carbon-free sources, while Alphabet Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOG#NASDAQ">GOOG</a>) (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/GOOGL#NASDAQ">GOOGL</a>) and Microsoft Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>) aim for comprehensive carbon-free energy solutions.
Microsoft and Google have shown increased interest in nuclear power to ensure a stable electricity supply, reflecting a broader commitment to sustainable energy practices.
As Amazon moves forward with its nuclear initiatives, the intersection of innovation and regulatory scrutiny will play a crucial role in shaping its energy strategy.
The company&#8217;s hiring of nuclear engineers underscores its serious intentions in this space, but the implications of these decisions could significantly affect its relationships within the energy sector.
Will Amazon&#8217;s foray into nuclear power pave the way for a more sustainable future, or complicate its standing in an already complex energy landscape?
According to&nbsp;<a href="https://pro.benzinga.com/?gspk=YWRhbWVja2VydDUzMzY&amp;gsxid=zBMR4PKmcgBw" target="_blank" rel="noreferrer noopener">Benzinga Pro</a>, AMZN stock has gained over 48% in the past year. Investors can gain exposure to the stock via ProShares Online Retail ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ONLN#NYSE">ONLN</a>) and&nbsp;Fidelity MSCI Consumer Discretionary Index ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/FDIS#NYSE">FDIS</a>).
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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Jefferies analyst Julien Dumoulin-Smith initiates coverage on American Electric Power (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AEP#NASDAQ">AEP</a>) with a Hold rating and announces Price Target of $107.

Initiation

Jefferies Initiates Coverage On American Electric Power with Hold Rating, Announces Price Target of $107

The utilities sector has emerged as the top-performing sector within the S&amp;P 500 <a href="https://www.benzinga.com/markets">so far in 2024</a>.
As of Sept. 11, the Utilities Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLU#NYSE">XLU</a>) has surged 22% year-to-date, outpacing all other sectors and even surpassing the technology sector – tracked by the Technology Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLK#NYSE">XLK</a>) – by 9 percentage points.
This marks a significant turnaround for utilities, which trailed tech by 40 percentage points in 2023.
<h3 class="wp-block-heading">Chart: Utilities Sector Outperforms S&amp;P 500, Tech Stocks In 2024</h3>
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="445" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/09/11161618/image-89-1024x445.png" alt="" class="wp-image-543220" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/09/11161618/image-89-1024x445.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/09/11161618/image-89-300x130.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/09/11161618/image-89-768x334.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/09/11161618/image-89-1536x667.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/09/11161618/image-89.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Image: <a href="https://bzresearch.myclickfunnels.com/benzinga-pro-content-webinar-registration/?utm_source=BZprocontent091124&amp;t=be2bearmibe3na1">Benzinga Pro</a></figcaption></figure>
<h3 class="wp-block-heading">The Drivers Behind The Utility Sector Surge</h3>
The robust performance of utilities stocks in 2024 has caught many investors by surprise, especially given the broader market&#8217;s focus on growth sectors like technology in recent years. 
&#8220;There is an undeniable defensive undertone here, as defensive stocks like utilities and consumer staples are leading the charge. The lack of momentum in the previously unstoppable &#8216;Magnificent 7&#8217; tech stocks could be signaling a shift in market sentiment,&#8221; analyst Michael Gayed.
This move toward defensive assets is particularly significant amid rising concerns over macroeconomic volatility and an increasingly unpredictable interest rate environment.
Bank of America recently raised its outlook for the utilities sector to Overweight, citing a combination of income and quality characteristics, which have become increasingly attractive as volatility rises.
&#8220;Client flows have suggested no love for the sector, but single stocks have begun to see inflows in recent weeks and ETF flows have begun to trend positively since the spring,&#8221; analysts at Bank of America highlighted.
&#8220;It's remarkable that the most defensive sector of the S&amp;P 500 has officially become the year&#8217;s top performer, despite the widespread consensus that the economy is doing well,&#8221; Otavio Costa, a macro strategist at Crescat Capital, said in a post on social media X.
<h3 class="wp-block-heading">Utilities Meet Rising Demand For AI-Driven Data Centers</h3>
Indeed, a critical factor boosting the utilities sector is the rising demand for electricity tied to the growth of AI-linked data centers. 
Carly Davenport, an analyst at Goldman Sachs, highlighted this trend in a note, saying, &#8220;Data center growth is starting to contribute meaningfully to power demand, and we've seen further positive revisions to the pipeline.&#8221;
Goldman Sachs estimates that data centers will be the largest driver of U.S. power demand growth, contributing around 90 basis points (bps) to the nation&#8217;s 2.4% power demand compound annual growth rate through 2030. 
This increase in demand is expected to lead to incremental capital investments in transmission and generation capacity, potentially driving further upside for utilities stocks over the next several years.
<h3 class="wp-block-heading">Top-Performing Utility Stocks in 2024</h3>
Several utility companies have experienced outsized gains this year, driven by strong earnings, strategic investments, and sectoral tailwinds. Here&#8217;s a look at the top-performing utility stocks year-to-date through Sept. 11:
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Name</td>
<td>Price Chg. % (YTD)</td>
</tr>
<tr>
<td>Vistra Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VST#NYSE">VST</a>)</td>
<td>107.95%</td>
</tr>
<tr>
<td>Constellation Energy Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CEG#NYSE">CEG</a>)</td>
<td>60.22%</td>
</tr>
<tr>
<td>NRG Energy, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NRG#NYSE">NRG</a>)</td>
<td>54.88%</td>
</tr>
<tr>
<td>NextEra Energy, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NEE#NYSE">NEE</a>)</td>
<td>37.39%</td>
</tr>
<tr>
<td>Public Service Enterprise Group Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PEG#NYSE">PEG</a>)</td>
<td>34.52%</td>
</tr>
<tr>
<td>American Electric Power Company, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AEP#NYSE">AEP</a>)</td>
<td>26.86%</td>
</tr>
<tr>
<td>The Southern Company (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SO#NYSE">SO</a>)</td>
<td>26.63%</td>
</tr>
</tbody>
</table>
</figure>
Read Next:
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Photo: Shutterstock

This Under-The-Radar Defensive AI Sector Quietly Outperforms All Others, Despite Receiving 'No Love' From Investors

BMO Capital analyst James Thalacker maintains American Electric Power (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AEP#NASDAQ">AEP</a>) with a Outperform and raises the price target from $105 to $109.

BMO Capital Maintains Outperform on American Electric Power, Raises Price Target to $109

American Electric Power Company, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/aep#NASDAQ">AEP</a>) is deploying systematic investments in infrastructural upgrades to enhance the reliability of its operations and serve its utility customers efficiently. The company is also making consistent investments to boost its renewable generation portfolio.
However, this Zacks Rank #3 (Hold) company faces risks like rising interest rates and an unfavorable financial position, which act as a headwind.
<h2>AEP&#39;s Tailwinds</h2>
American Electric has a capital investment plan of $43 billion for the 2024-2028 period in its core regulated operations, contracted renewables and wires. This should boost AEP&#39;s customer reliability. The company expects this systematic investment to support it in achieving long-term earnings growth of 6-7%.
Moreover, American Electric intends to invest roughly $27.3 billion in its transmission and distribution operations between 2024 and 2028 to build a more efficient grid and provide consumers with customized energy solutions.
In the clean energy space, as of June 30, 2024, AEP has regulatory nods from several state regulatory commissions to purchase 2,811 megawatts of owned renewable generation facilities for a total estimated cost of $6.6 billion. It plans to invest $9.4 billion in controlled renewable expansion between 2024 and 2028. This should further boost its renewable generation portfolio in the years to come.
<h2>Headwinds Faced by AEP</h2>
Since utility firms like American Electric Power finance their operations through both short and long-term borrowings, the increased interest rate environment in the United States remains a headwind for AEP in the form of higher interest expenses. In the second quarter of 2024, the company&#39;s interest expenditure increased by 1.2% year over year. If American Electric continues to face such escalating interest costs, it might adversely affect its financial situation in the near future.
As of June 30, 2024, American Electric had $40 billion in long-term debt, while its cash equivalents totaled $0.47 billion. As of the same date, its current debt was $3.75 billion. As both AEP&#39;s current and long-term debt levels remained far greater than its cash reserve, the company seems to have a weak position with respect to its solvency.
<h2>AEP Stock Price Movement</h2>
In the past three months, shares of AEP have risen 11.8% compared with the industry&#39;s growth of 3.6%.
<img alt="Zacks Investment Research" src="https://staticx-tuner.zacks.com/images/articles/charts/dc/75929.jpg?v=1237332659" />
Image Source: Zacks Investment Research
<h2>Stocks to Consider</h2>
Some better-ranked stocks from the same industry are DTE Energy Company (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/dte#NYSE">DTE</a>), The AES Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/aes#NYSE">AES</a>) and NiSource Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ni#NYSE">NI</a>), each carrying a Zacks Rank #2 (Buy) at present.
DTE Energy&#39;s long-term (three to five years) earnings growth rate is 8.1%. The company delivered an average earnings surprise of 0.77% in the last four quarters.
AES delivered an average earnings surprise of 19.18% in the last four quarters. The Zacks Consensus Estimate for AES&#39; 2024 sales suggests an improvement of 3.6% from the prior-year reported figure.
NiSource&#39;s long-term earnings growth rate is 6%. The company delivered an average earnings surprise of 20.64% in the last four quarters.
<a href="https://www.zacks.com/stock/news/2328992/aep-stock-rides-on-investments-despite-high-interest-rates?cid=CS-BENZ-FT-analyst_blog|zer_report_update-2328992">To read this article on Zacks.com click here.</a>

Earnings

AEP Stock Rides on Investments Despite High Interest Rates

B of A Securities analyst Julien Dumoulin-Smith maintains American Electric Power (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AEP#NASDAQ">AEP</a>) with a Underperform and raises the price target from $97 to $98.

B of A Securities Maintains Underperform on American Electric Power, Raises Price Target to $98

The AES Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/aes#NYSE">AES</a>) is a global energy company. Its strategic investments to expand its clean energy generation capacity and construction of new generation, transmission and distribution projects are likely to boost its performance. Given its growth opportunities, AES makes for a solid investment option in the Utility sector.
The company currently carries a Zacks Rank #2 (Buy). Let&#39;s look at the factors that are driving the stock.
<h2>Growth Projections &amp; Surprise History of AES</h2>
The Zacks Consensus Estimate for 2024 and 2025 earnings per share is pegged at $1.91 and $2.08, respectively, which indicates year-over-year growth of 8.5% and 8.8%.
The consensus estimate for 2024 and 2025 sales is pegged at $13.32 billion and $13.77 billion, respectively, which indicates year-over-year growth of 5.1% and 3.4%.
AES delivered an average earnings surprise of 19.18% in the past four quarters.
<h2>AES Stock&#39;s Dividend Yield</h2>
AES distributes dividends to shareholders on a regular basis. Its current dividend yield is 3.82%, which is better than the industry&#39;s average of 3.44%.
<h2>AES&#39; Return on Equity</h2>
AES&#39; current return on equity (ROE) is pinned at 32.74%, which is more than the industry average of 10.34%. ROE, a profitable measure, reflects how effectively a company is utilizing its shareholders&#39; funds in its operations to generate income.
<h2>AES&#39; Investments</h2>
AES is one of the forerunners in the utility industry&#39;s transition to clean energy by investing in sustainable growth and innovative solutions. Notably, the company completed the construction and the acquisition of 976 megawatts of wind, solar and energy storage, during the second quarter of 2024. It signed long-term contracts for 1 gigawatt (GW) of new renewables.
AES signed agreements to support 1.2 GW of new data center load at U.S utilities. It also signed 15-year power purchase agreements for 727 MW of wind and solar energy to serve data center growth in Texas and a 310 MW retail supply agreement to support data centers throughout Ohio.
This should help the company to duly add 3.6 GW of new renewable projects to its portfolio in 2024 and 14-17 GW of renewable energy capacity to its project portfolio during the 2023-2025 time period.
<h2>AES Stock Performance</h2>
Shares of AES have gained 22% in the past six months compared with the sector&#39;s 18.3% growth.
<img alt="Zacks Investment Research" src="https://staticx-tuner.zacks.com/images/articles/charts/a5/75393.jpg?v=956434569" />
Image Source: Zacks Investment Research
<h2>Other Stocks to Consider</h2>
Some other top-ranked stocks in the industry are American Electric Power Company, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/aep#NASDAQ">AEP</a>), PPL Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ppl#NYSE">PPL</a>) and NiSource Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ni#NYSE">NI</a>). Each of these stocks currently carries a Zacks Rank of 2.
American Electric Power&#39;s long-term (three to five years) earnings growth rate is 6.20%. The Zacks Consensus Estimate for 2024 sales indicates year-over-year growth of 5.7%.
PPL Corporation&#39;s long-term earnings growth rate is 6.80%. The consensus estimate for 2024 earnings indicates year-over-year growth of 7.5%.
NiSource delivered an average earnings surprise of 20.64% in the last four quarters. The Zacks Consensus Estimate for 2024 earnings indicates year-over-year growth of 7.5%.
<a href="https://www.zacks.com/stock/news/2327144/here-s-why-you-should-add-aes-to-your-portfolio-right-now?cid=CS-BENZ-FT-analyst_blog|rank_focused-2327144">To read this article on Zacks.com click here.</a>

Dividends

Contracts

Here's Why You Should Add AES to Your Portfolio Right Now

Morgan Stanley analyst Stephen Byrd maintains American Electric Power (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AEP#NASDAQ">AEP</a>) with a Overweight and raises the price target from $95 to $102.

Morgan Stanley Maintains Overweight on American Electric Power, Raises Price Target to $102

American Electric Power's (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AEP#NYSE">AEP</a>) short percent of float has risen 8.67% since its last report. The company recently reported that it has 8.67 million shares sold short, which is 1.63% of all regular shares that are available for trading. Based on its trading volume, it would take traders 3.07 days to cover their short positions on average.
<h3>Why Short Interest Matters</h3>
Short interest is the number of shares that have been sold short but have not yet been covered or closed out. <a href="https://www.benzinga.com/money/how-to-short-a-stock/">Short selling</a> is when a trader sells shares of a company they do not own, with the hope that the price will fall. Traders make money from short selling if the price of the stock falls and they lose if it rises.
Short interest is important to track because it can act as an indicator of market sentiment towards a particular stock. An increase in short interest can signal that investors have become more bearish, while a decrease in short interest can signal they have become more bullish.
See Also: <a href="https://www.benzinga.com/short-interest">List of the most shorted stocks</a>
<h3>American Electric Power Short Interest Graph (3 Months)</h3>
<img src="https://www.benzinga.com/files/images/story/2024/1724253310_0.png" alt="short_fig" />
As you can see from the chart above the percentage of shares that are sold short for American Electric Power has grown since its last report. This does not mean that the stock is going to fall in the near-term but traders should be aware that more shares are being shorted.
<h3>Comparing American Electric Power's Short Interest Against Its Peers</h3>
Peer comparison is a popular technique amongst analysts and investors for gauging how well a company is performing. A company's peer is another company that has similar characteristics to it, such as industry, size, age, and financial structure. You can find a company's peer group by reading its 10-K, proxy filing, or by doing your own similarity analysis.
According to <a href="https://pro.benzinga.com/">Benzinga Pro</a>, American Electric Power's peer group average for short interest as a percentage of float is 2.09%, which means the company has less short interest than most of its peers.
Did you know that increasing short interest can actually be bullish for a stock? <a href="https://www.benzinga.com/money/how-to-make-money-on-a-short-squeeze/">This post by Benzinga Money explains how you can profit from it.</a>
This article was generated by Benzinga's automated content engine and was reviewed by an editor.

Scotiabank analyst Andrew Weisel maintains American Electric Power (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AEP#NASDAQ">AEP</a>) with a Sector Outperform and raises the price target from $99 to $108.

Scotiabank Maintains Sector Outperform on American Electric Power, Raises Price Target to $108

EverCharge Partners With Public Service Company of Oklahoma, A Subsidiary Of American Electric Power, For Strategic Collaboration On Large-Scale EV Charging Solutions

JP Morgan analyst Jeremy Tonet maintains American Electric Power (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AEP#NASDAQ">AEP</a>) with a Overweight and raises the price target from $101 to $108.

JP Morgan Maintains Overweight on American Electric Power, Raises Price Target to $108

B of A Securities analyst Julien Dumoulin-Smith downgrades American Electric Power (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AEP#NASDAQ">AEP</a>) from Neutral to Underperform and raises the price target from $96 to $97.

Downgrades

B of A Securities Downgrades American Electric Power to Underperform, Raises Price Target to $97

Barclays analyst Nicholas Campanella maintains American Electric Power (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AEP#NASDAQ">AEP</a>) with a Equal-Weight and raises the price target from $91 to $96.

Barclays Maintains Equal-Weight on American Electric Power, Raises Price Target to $96

Scotiabank analyst Andrew Weisel maintains American Electric Power (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AEP#NASDAQ">AEP</a>) with a Sector Outperform and raises the price target from $90 to $99.

Scotiabank Maintains Sector Outperform on American Electric Power, Raises Price Target to $99

JXI: Utilities Dashboard For September

Utilities are downgraded to neutral by Wells Fargo despite being a top sector performer

Janus Henderson Contrarian Fund Q2 2024 Commentary

Wide gap between 'haves' and 'have nots' in utilities makes for tough calls - Jefferies

Janus Henderson Opportunistic Alpha Managed Account Q2 2024 Commentary

In a report released today, David Arcaro from Morgan Stanley maintained a Buy rating on American Electric Power (AEP – Research Report), with a pri...

Morgan Stanley Remains a Buy on American Electric Power (AEP)

Lazard Global Listed Infrastructure Portfolio Q2 2024 Commentary

Exxon Mobil, Visa Among 17 Companies To Announce Annual Dividend Increases In October

Load Growth To Drive Earnings At American Electric Power

We think it's time to fade the utility sector – BTIG

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Commodities

Press Releases

AEP DECLARES QUARTERLY DIVIDEND ON COMMON STOCK

AEP Reports Second-Quarter 2024 Earnings, Reaffirms Guidance

AEP Tops Utilities Industry on Forbes America's Best Employers for Women List

EverCharge and American Electric Power Announce New Collaboration

AEP Realigns Leadership Structure to Strengthen Customer Focus and Drive Execution

AEP Recognized as a Top Utility in Economic Development

Datamaran Secures $33M Growth Financing from Morgan Stanley Expansion Capital; More Than Doubles ARR Since Series B

AEP Completes Sale of AEP OnSite Partners

AEP Names Joseph Moore Senior Vice President of Business Transformation to Drive Performance and Efficiency

Statement Regarding the Unsupported Data Center Stipulation filed in PUCO Docket Number 24-508-EL-ATA

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Centrais Electricas Brasileiras S A American Depositary Shares (Each representing one Common Share)

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Centrais Electricas Brasileiras S.A.- Eletrobr?!s American Depositary Shares (Each representing one Preferred Share)

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Companhia Paranaense de Energia (COPEL) American Depositary Shares (each representing one Unit consisting one Common Share and four non-voting Class B Preferred Shares)

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American Electric Power (AEP) Forecast

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