We recently compiled a list of the 15 Best Stocks to Buy During Recession. In this article, we are going to take a look at where Public Service Enterprise Group Incorporated (NYSE:PEG) stands against the other stocks.
As per BlackRock, 2025 started with a bumpy ride for the US stocks. That being said, the asset manager believes that the sentiment has been a critical driver, but fundamentals seem to be healthy. This makes up for an optimistic longer-run outlook. Despite the tariff shocks creating difficult markets, the firm is constructive in its outlook and opines that volatility is an opportunity to capitalize on stock dispersion. Furthermore, Asia continues to exhibit a diversification opportunity for making investments in the AI theme, with equities providing low correlation to US counterparts.
Amidst Worries, There Is a Silver Lining
The trade and tariff uncertainty, which fueled the early-year volatility, advanced at the beginning of Q2 due to the US tariff pronouncements, according to the investment management company. This resulted in a global market meltdown and revived fears related to recession. However, as the quarter progressed, the tariff tensions took a backseat, and there was some optimism visible in the broader US markets. The asset manager believes that, while tariffs remain a critical measure, the potential for market-supporting policies like deregulation and corporate tax cuts provides some room for emergent optimism.
The firm highlighted the importance of an active approach in a bid to capitalize on inefficiencies and to make precise and intentional decisions amidst historic change and transition. While the results of bilateral tariff negotiations remain unpredictable, having a pulse on company dynamics, mainly when the macro picture remains unclear, can act as a differentiator for portfolios.
Policy Measures Likely to Support Moving Forward
The firm opines that corporate strength has supported the US equities’ momentum, and it comes through in earnings and market share. As per the firm, relatively pro-industry policies have stimulated healthy FCF. Several companies throughout different time frames have deployed the cash for future business growth. Even though the policy uncertainty in the current time of transition led to the pause in large investment decisions, the company believes that moves toward deregulation and the reshoring of supply chains once policy gets settled can result in the revival of CapEx spending throughout industries, such as technology and industrials. Despite tariffs dominating, the asset manager expects that deregulation and other policy priorities can regain attention. The high drive for innovation is the long-term secular trend that can support the US equities.
Our Methodology
To list the 15 Best Stocks to Buy During Recession, we considered the stocks from recession-proof industries such as utilities, consumer defensive, and healthcare. After getting an extensive list of 25-30 stocks, we chose the ones popular among hedge funds. Finally, the stocks were arranged in ascending order of their hedge fund sentiments, as of Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A view of a transmission tower carrying electric wires over the horizon.
Public Service Enterprise Group Incorporated (NYSE:PEG)
Number of Hedge Fund Holders: 142
Public Service Enterprise Group Incorporated (NYSE:PEG) operates in electric and gas utility and nuclear generation businesses. The company’s businesses include Public Service Electric and Gas Co. (PSE&G), PSEG Power, and PSEG Long Island. Morgan Stanley analyst David Arcaro is optimistic about the company’s stock. The analyst’s views stem from a combination of factors demonstrating a positive growth outlook for the company. Furthermore, the analyst opines that the 2025 EPS guidance remains closely aligned with market expectations, aided by new distribution rates, investment recovery mechanisms, and a higher rate base.
For 2025, Public Service Enterprise Group Incorporated (NYSE:PEG) initiated a non-GAAP operating earnings guidance of $3.94 – $4.06 per share, demonstrating a rise of ~9% at the midpoint above 2024 results. The 2025-2029 capital spending plan of $22.5 billion – $26 billion consists of $21 billion – $24 billion of regulated investment, reflecting a rise of ~$3 billion from its prior five-year plan of $18 billion to $21 billion. This increase was supported by incremental investments for PSE&G to address the increased customer demand, modernize infrastructure, and CEF-EE II programs.
Sound Shore Management, an investment management firm, released its investor letter for Q3 2024. Here is what the fund said:
“In recent letters we have discussed the resurgence of nuclear power as a base load electricity source and the opportunities our team has uncovered in the power generation space. Public Service Enterprise Group Incorporated (NYSE:PEG), better known as PSE&G, is another example and one of our strongest contributors for the three-month period. The company is a “hybrid” regulated utility and unregulated nuclear power generator that we were able to purchase at an attractive price relative to its earning power. PSE&G’s well managed, regulated utilities provide consistent returns that we expect will grow steadily with their rate bases. As well, we believe there is unappreciated value in their nuclear plants which sit in an unregulated subsidiary that can capture the upside potential of increased power prices. Carbon-free and reliable electricity commands a premium in the marketplace, as seen in recently announced 20-year long data center sales contracts by peer companies. Presently, PSE&G is in discussions to do the same. Our projections estimate this provides a 20% or more upside to earnings for PSE&G from here over the next few years.”
Overall PEG ranks 1st on our list of the best stocks to buy during recession. While we acknowledge the potential of PEG as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than PEG but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
