With oil prices above US$100 per barrel, rising geopolitical risks in the Middle East and renewed pressure on growth sectors after higher AI spending plans, many investors are taking a closer look at larger U.S. utilities stocks for potential ballast in a more volatile market. This article walks through how those macro shocks connect to the Utilities Stocks screener and what that might mean for risk, income and capital allocation. It will also reveal 3 stocks from the screener that appear positively exposed to the current news backdrop, helping you decide whether they deserve a place on your watchlist.

Entergy (ETR)

Overview: Entergy is a regulated U.S. utility that generates electricity from gas, nuclear, coal, hydro and solar assets and delivers it to about 3.1 million customers across Arkansas, Louisiana, Mississippi and Texas, while also selling power to wholesale buyers.

Operations: Entergy generates essentially all of its approximately US$13.3b in annual revenue from its core Utility segment in the United States, with only small contributions from other activities and eliminations.

Market Cap: US$52.6b

Entergy stands out in this utilities screener because it combines exposure to essential power demand along the Gulf Coast with a large, regulated capital program tied to data center growth and decarbonization. Management is planning around US$40b of grid, resilience and renewables investment over four years, while also working on cost-cutting partnerships such as its carbon capture agreement with Mitsubishi Heavy Industries. On the flip side, heavy use of debt, recent equity issuance and concentrated Gulf South exposure leave Entergy sensitive to storms, funding costs and future rate decisions. For investors considering the relationship between oil prices, power demand from industry and market volatility in the context of a large regulated utility, Entergy is a company worth examining more closely.

Entergy’s large grid and renewables pipeline may be obscuring the real tension between its growth plans and funding risks. Before you decide where it fits on your watchlist, review the 2 key rewards and 2 important warning signs (1 is major!).

American Water Works Company (AWK)

Overview: American Water Works Company is the largest publicly traded U.S. water utility, supplying regulated water and wastewater services across 14 states to about 3.6 million customers through a network of treatment plants, wells, pumping stations, storage facilities and dams.

Operations: American Water Works Company generates essentially all of its approximately US$5.2b in annual revenue in the United States, with around US$4.8b from Regulated Businesses and US$420m from Other activities.

Market Cap: US$26.1b

American Water Works Company provides exposure to essential water infrastructure at a time when some investors are seeking resilient, regulated cash flows as oil prices, inflation worries and market volatility all rise. Earnings are forecast to grow, supported by ongoing infrastructure upgrades, acquisitions and recent regulatory decisions in states such as Pennsylvania and California that support long term capital spending on quality and reliability. At the same time, heavy use of debt funding, pressure on free cash flow coverage of dividends and sensitivity to regulatory decisions mean the investment case involves risks as well as potential benefits. For investors weighing defensiveness against funding and valuation considerations, this is a business that may warrant further research.

American Water Works Company’s earnings story is tied to essential infrastructure, but the real signal may sit beneath headline growth. Review the analyst forecasts for American Water Works Company to understand what the current trajectory could be masking.

Sempra (SRE)

Overview: Sempra is a regulated utility group that supplies electricity and natural gas to millions of people in California and Texas. It also owns energy infrastructure in the United States, Mexico and other markets that supports cleaner energy and LNG exports.

Operations: Sempra generates most of its revenue from Sempra California at about US$11.6b, with around US$2.0b from Sempra Infrastructure and a small offset from intersegment eliminations.

Market Cap: US$60.8b

Investors looking at utilities as a potential refuge from higher oil prices and rising volatility may find Sempra interesting because it links large regulated networks in California and Texas with LNG and energy infrastructure projects that are tied to global energy demand. The company is investing heavily in Texas grid expansion and LNG export capacity. However, that same spending comes with financing pressure, a relatively high P/E multiple and dividends that are not well covered by free cash flow. With activist attention around its Oncor stake, upcoming leadership changes and regulatory risks, Sempra presents a combination of growth opportunities and balance sheet considerations that may warrant closer analysis before making any decisions.

Sempra’s expanding grids and LNG projects could be masking a very different risk reward profile than its current P/E suggests. Before you decide how that balance really looks, review the 1 key reward and 4 important warning signs (1 is major!)

The three utilities covered here are just a starting point, and the full US Utilities Stocks screener surfaces 17 more U.S. utilities stocks with similarly detailed business narratives and risk profiles. Use Simply Wall St to identify and analyze the specific catalysts, balance sheet traits and dividend characteristics that matter to you so you can focus on the opportunities in this sector that best match your own criteria.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.