As of Feb. 25, 2026, two stocks in the utilities sector could be flashing a real warning to investors who value momentum as a key criteria in their trading decisions.The RSI is a momentum indicator, which compares a stock’s strength on days when prices go up to its strength on days when prices go down. When compared to a stock’s price action, it can give traders a better sense of how a stock may perform in the short term. An asset is typically considered overbought when the RSI is above 70, according to Ben ...

Core Insights - Two stocks in the utilities sector are signaling potential warnings for momentum-focused investors as of February 25, 2026 [1] Group 1: Momentum Indicators - The Relative Strength Index (RSI) is a key momentum indicator that compares a stock's performance on up days versus down days, helping traders gauge short-term performance [2] - A stock is generally considered overbought when its RSI exceeds 70, indicating potential caution for investors [2] Group 2: Company Specifics - OGE Energy Corp (NYSE:OGE) and NextEra Energy Inc (NYSE:NEE) are identified as major overbought stocks in the utilities sector [3] - NextEra Energy recently increased its quarterly dividend from $0.57 per share to $0.6232 per share, with its stock appreciating approximately 12% over the past month and reaching a 52-week high of $95.84 [4] - The RSI for NextEra Energy is reported at 78.6, indicating it is in the overbought territory [4] - On a recent trading day, NextEra Energy's shares rose by 1.7%, closing at $95.68 [4]

Core Viewpoint - The company delivered 2025 earnings in the top half of guidance, driven by robust weather-normalized load growth of approximately 7% and capital investment recovery [1] Group 1: Financial Performance - The company achieved a 6% EPS compound annual growth rate over the last ten years, strengthening its pure-play electric utility profile [1] - The company successfully executed a well-subscribed equity offering and secured financing to support approximately $1 billion in incremental capital expenditures through 2030 [1] Group 2: Strategic Initiatives - The sustained momentum is attributed to a 'North Star' strategy of maintaining some of the lowest electricity rates in the nation to attract industrial investment and job growth [1] - The company advanced the generation transition by cutting the ribbon on new combustion turbines at Tinker Air Force Base, marking the start of a 1.3 gigawatt build-out through 2030 [1] Group 3: Operational Efficiency - The company maintained strict cost discipline with O&M per growth averaging less than 1% over the last decade despite significant infrastructure expansion [1]

Core Viewpoint - FirstEnergy reported quarterly earnings of $0.53 per share, exceeding the Zacks Consensus Estimate of $0.52 per share, but down from $0.67 per share a year ago, indicating an earnings surprise of +1.92% [1] Financial Performance - The company posted revenues of $3.8 billion for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 16.94%, compared to $3.18 billion in the same quarter last year [2] - Over the last four quarters, FirstEnergy has exceeded consensus EPS estimates four times and topped revenue estimates three times [2] Stock Performance - FirstEnergy shares have increased by approximately 11.9% since the beginning of the year, while the S&P 500 has declined by 0.1% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations of outperforming the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.71 on revenues of $3.87 billion, and for the current fiscal year, it is $2.71 on revenues of $14.99 billion [7] - The trend of estimate revisions for FirstEnergy was favorable ahead of the earnings release, which may influence future stock movements [5][6] Industry Context - The Utility - Electric Power industry, to which FirstEnergy belongs, is currently ranked in the top 36% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8]

Core Viewpoint - Investors in the Utility - Electric Power sector should consider Avista (AVA) and OGE Energy (OGE) for potential value opportunities, with a closer examination needed to determine which stock offers better value [1] Group 1: Zacks Rank and Earnings Outlook - Avista has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while OGE Energy has a Zacks Rank of 3 (Hold) [3] - The Zacks Rank emphasizes stocks with positive revisions to earnings estimates, suggesting that AVA has an improving earnings outlook [3] Group 2: Valuation Metrics - AVA has a forward P/E ratio of 15.04, compared to OGE's forward P/E of 18.09, indicating that AVA may be undervalued relative to OGE [5] - The PEG ratio for AVA is 2.13, while OGE's PEG ratio is 2.59, suggesting AVA has a more favorable growth outlook relative to its valuation [5] - AVA's P/B ratio is 1.27, while OGE's P/B ratio is 1.85, further indicating that AVA is potentially undervalued [6] Group 3: Value Grades - AVA has earned a Value grade of B, while OGE has a Value grade of C, suggesting that AVA is the more attractive option for value investors [6]

Core Viewpoint - OGE Energy Corp. is experiencing mixed analyst sentiments, with recent downgrades and price target adjustments reflecting concerns about its current valuation relative to peers, despite solid fundamentals and a strong dividend yield [2][3][4]. Group 1: Analyst Ratings and Price Targets - Wells Fargo downgraded OGE Energy from 'Equal Weight' to 'Underweight' and reduced its price target from $45 to $39, citing a 3% premium over peers and limited upside potential [3]. - Barclays analyst Nicholas Campanella lowered the price target from $51 to $49 but maintained an 'Overweight' rating, indicating a more favorable long-term outlook despite the adjustment [4]. Group 2: Financial Performance and Dividends - OGE Energy boasts an annual dividend yield of 3.89% and has been included in the Dividend Contenders List, highlighting its attractiveness for income-focused investors [4]. - The company's earnings per share (EPS) growth is expected to align with forecasts, suggesting stable financial performance in the near term [3].

Group 1: Company Overview - OGE Energy Corp. is a holding company primarily engaged in providing electricity in Oklahoma and western Arkansas, operating mainly through its electric utility business [5] Group 2: Analyst Ratings and Price Targets - RBC Capital analyst Stephen D'Ambrisi raised the price target on OGE Energy Corp. to $51 from $49 while maintaining a Sector Perform rating, ahead of the fourth-quarter earnings in the utilities sector [2] - BMO Capital initiated coverage of OGE Energy with a Market Perform rating and a $45 price target, citing a supportive fundamental backdrop and generation capacity needs as opportunities for capital investment [4] Group 3: Sector Trends - The utilities sector has experienced frequent changes in capital deployment plans over the past 18 months, with many utilities providing early or off-cycle previews of revised capital plans, prompting RBC to adjust its sector models [3]

Core Insights - Listed infrastructure underperformed global equities in Q4, despite two cuts in short-term rates in the U.S., due to higher long-term bond yields and a prevailing higher-for-longer sentiment [3] - European utilities outperformed U.S. utilities, aided by improving regulations, while renewables benefited from their increasing relevance in AI and policy derisking [3] Sector Performance - Underperforming sectors included natural gas utilities, energy infrastructure pipelines, communication towers, and North American rails, primarily due to higher production levels and adverse weather forecasts for natural gas [4] - Electric utilities, particularly in Western Europe, were the top contributors, with SSE and Iberdrola leading the performance [5][6][7] Company Highlights - SSE, the largest renewable energy generator in the U.K., saw its share price rise as funding risks diminished and macroeconomic concerns eased [6] - Iberdrola, a multinational integrated electric utility, raised guidance during its third-quarter results, reflecting strong operational performance [7] - OGE Energy and Redeia were the largest detractors, with OGE facing delays in a data center deal and Redeia impacted by negative sentiment from a regulatory review [8][9] Outlook - The outlook for listed infrastructure remains positive, with expectations of continued performance driven by inflection in electricity demand and solid earnings growth, supported by lower nominal bond yields [10] - Electric utilities are benefiting from several tailwinds, including the energy transition, climate change adaptation, and growing electricity demand from AI data centers and industrial sectors [11] Portfolio Highlights - The strategy saw positive contributions from eight out of ten sectors, with electric and water utilities being the top contributors, while energy infrastructure and communications were detractors [13] - The strategy outperformed relative to the FTSE Global Core Infrastructure 50/50, driven by stock selection in electric, water, and gas utility sectors, along with a renewables overweight [14] - Top contributors to absolute returns included SSE, Iberdrola, Enel, NextEra Energy, and Clearway Energy, while detractors included OGE Energy, Redeia, WEC Energy, Enbridge, and Crown Castle [15] Investment Activity - New positions were initiated in U.S. electric utilities Portland General Electric and Edison International, as well as French utility Engie and Brazilian utility Axia Energia, while positions in CPFL Energia, Crown Castle, and WEC Energy were exited [16]

Core Insights - American Electric Power (AEP) is benefiting from strategic investments that enhance infrastructure and customer service efficiency while expanding its renewable energy portfolio [1][2] Investment Plans - AEP plans to invest $36 billion in its transmission and distribution business from 2026 to 2030, which will support critical upgrades and improve long-term revenue growth prospects [2] - The company is executing a $72 billion investment plan across electricity generation, transmission, and distribution operations, including renewables, projecting a 10% compound annual growth rate (CAGR) for its rate base through 2030, with nearly 90% of the investment expected to be recovered through reduced regulatory lag mechanisms [3][7] Renewable Energy Investments - AEP has been actively enhancing its renewable generation portfolio, spending $1.7 billion in Q3 2025 to acquire four power plants, including the Pixley Solar Energy Facility and Flat Ridge IV and V [4] - As of September 30, 2025, AEP received regulatory approvals to acquire approximately 1,826 megawatts (MW) of renewable generation facilities through investments totaling $4.5 billion [4] Operational Challenges - AEP Texas relies heavily on a limited number of Retail Electric Providers (REPs), with its two largest REPs accounting for about 40% of operating revenues in 2024, exposing the company to risks related to payment delays or defaults [5][7] Stock Performance - Over the past six months, AEP's shares have increased by 11.6%, outperforming the industry's growth of 7.5% [6]

Core Insights - CenterPoint Energy, Inc. (CNP) is focused on systematic investments to enhance its infrastructure, improve transmission and distribution networks, upgrade the grid, and expand its renewable energy portfolio to provide clean energy to customers [1] - The company's long-term earnings growth rate is projected at 8.86% over the next three to five years [1] Tailwinds - Rising electricity consumption from residential and commercial sectors, driven by the electrification of transportation and buildings, as well as the growth of AI-based data centers, is increasing demand for utility services, leading to higher sales for CenterPoint Energy [2] Capital Investment Plan - CenterPoint Energy has a long-term capital investment plan of $65 billion for the period 2026-2035 aimed at modernizing the grid system, which includes upgrading underground distribution lines and installing self-healing automation devices to enhance grid resilience and reliability [3] - These investments are expected to reduce the frequency and duration of outages while lowering operating costs [3] Renewable Energy Expansion - The company is expanding its energy portfolio by adding renewable and clean energy sources, targeting approximately 1,000 megawatts (MW) of wind and solar generation capacity by 2026 [4] - Additionally, CenterPoint aims to add 200 MW each of wind and solar resources by 2030, with a potential need for an additional 400 MW of wind resources by 2032 [4] Headwinds - Tariffs imposed by the U.S. government on imports, including solar panels, pose a significant threat to the company's solar project development, potentially increasing costs and impacting the financial viability of projects [5] Price Performance - Over the past year, CNP shares have increased by 20.3%, although this growth lags behind the industry's growth of 21.1% [6] Zacks Rank & Comparisons - CenterPoint Energy currently holds a Zacks Rank 3 (Hold), while competitors such as Dominion Energy, Inc. (D), NextEra Energy, Inc. (NEE), and OGE Energy Corp. (OGE) have better rankings with Zacks Rank 2 (Buy) [9] - These competitors have delivered average earnings surprises of 12.72%, 4.39%, and 10.45% over the last four quarters, respectively [9]