In this article, we will discuss 11 Most Undervalued Utility Stocks to Buy Now.
Undervalued utility stocks offer a compelling mix of defensive stability and attractive entry pricing in 2026. Utilities provide essential, recession-resistant services such as electricity, water, and natural gas, generating reliable and regulated cash flows that make them a traditional safe harbor during market volatility. Their reputation for stable, above-average dividend payments makes them particularly appealing for income-focused investors, especially in a declining interest rate environment where lower borrowing costs can enhance profitability and increase the relative attractiveness of dividend yields.
When these defensive characteristics are paired with low forward P/E ratios, the investment case becomes even stronger. A discounted forward multiple suggests investors are paying less for each dollar of expected future earnings, potentially signaling undervaluation relative to peers or broader market benchmarks. If a utility’s trailing P/E is higher than its forward P/E, it may indicate projected earnings growth, which means investors can gain exposure to improving fundamentals at a reasonable price. In many cases, subdued valuations reflect cautious expectations, which can create upside if companies exceed forecasts.
Importantly, utilities are no longer purely slow-growth income plays. In 2026, rising electrification and surging power demand from AI-driven data centers are creating incremental growth opportunities across the sector. This combination of defensive cash flows, dividend strength, structural demand tailwinds, and discounted valuations positions low P/E utility stocks as attractive value-oriented investments with both income stability and potential capital appreciation.
With this context in mind, here is a list of the 11 most undervalued utility stocks now.
Our Methodology
We used screeners to identify utility stocks that are trading below a forward P/E of 20, and limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
11 Most Undervalued Utility Stocks to Buy Now
11. Sempra (NYSE:SRE)
Forward P/E: 17.40
On February 27, Wells Fargo raised the firm’s price target on Sempra (NYSE:SRE) to $113 from $112 and maintained an Overweight rating following the company’s earnings release. In the firm’s view, the latest print reinforces that Oncor represents the most valuable asset in the regulated utility sector, supported by an updated capital expenditure plan that now drives a projected 17% compound annual growth rate in rate base. Wells Fargo believes the moving pieces across Sempra’s portfolio — including transmission expansion, regulated infrastructure investment, and capital recycling — further strengthen its “best idea” Overweight thesis, underpinned by durable earnings visibility and above-peer rate base growth.
The day prior, Sempra (NYSE:SRE)’s board of directors declared a quarterly dividend of $0.6575 per share payable April 15 to shareholders of record at the close of business on March 19. The declaration increases the company’s annualized common dividend to $2.63 per share from $2.58 in 2025, reflecting continued dividend growth alongside its capital investment cycle.
Founded in 1998 and headquartered in San Diego, California, Sempra (NYSE:SRE) is a leading North American energy infrastructure company serving nearly 40 million consumers across the United States, Mexico, and global energy markets.
10. New Jersey Resources Corporation (NYSE:NJR)
Forward P/E: 15.92
On February 12, JPMorgan Chase raised its price target on New Jersey Resources Corporation (NYSE:NJR) to $56 from $52 and reiterated an Overweight rating.
During New Jersey Resources Corporation (NYSE:NJR)’s fiscal Q1 2026 earnings call, management set initial FY2026 NFEPS guidance at $3.03–$3.18 and subsequently increased it by $0.25 to $3.28–$3.43 following strong winter energy services performance — marking the sixth consecutive annual guidance raise. The outlook aligns with a 7%–9% long-term NFEPS growth target. NJR reaffirmed its five-year $4.8–$5.2 billion CapEx plan through FY2030 (~$5.0 billion midpoint), approximately 40% above the prior five-year period, with more than 60% allocated to New Jersey Natural Gas, expected to contribute roughly 70% of FY2026 NFEPS.
Additional growth drivers include Storage & Transportation earnings projected to more than double by 2027 and Leaf River working gas capacity expanding over 70% to 43 Bcf by 2028 (potentially 55 Bcf with a fourth cavern). Clean Energy Ventures continues scaling, targeting over 50% in-service capacity growth over two years. Balance sheet metrics remain solid, with adjusted FFO-to-debt projected near 20% over five years and no block equity issuance anticipated. Hedging and affordability programs further enhance earnings stability and customer retention.
Formed in 1981 and headquartered in Wall, New Jersey, New Jersey Resources Corporation (NYSE:NJR) provides natural gas distribution, transportation, storage, asset management, and clean energy services.
