Bank of America says these five stocks could benefit from rising energy demand

Key Takeaways

• Bank of America analysts predict increasing demand for electricity, with certain energy companies likely to benefit the most.

• Analysts wrote that they like DBA Sempra, Pinnacle West Capital, TXNM Energy, Entergy and Northwestern Energy Group.

• The bank explained that these companies operate in areas where energy demand is likely to rise the most.

Bank of America predicts a big jump in electricity demand, with some energy companies better positioned to capitalize than others.

The bank said the utilities it believes will benefit most from regional growth are DBA Sempra (SRE), Pinnacle West Capital (PNW), TXNM energy (TXNM), Entergy (ETR), and Northwestern Energy Group (NWE). The analysts have buy ratings on all five stocks.

BofA analysts wrote in a note to clients that after two decades of stagnant electricity demand growth, “there is now evidence that demand growth has returned, driven by industry re-shoring, the development of data and crypto mining centers and the electrification of buildings, transport and infrastructure.”

They estimate that there will be a need for an incremental 100 gigawatts of effective capacity by 2035, with the top scenario of 300 GW.

The analysts said they focused on these five companies because the regions they cover — Texas, the Southwest, the Northwest and the 14 states in the Southwest Power Pool — are likely to see the highest growth rates. Shares of all five are higher since the start of the year.

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Read the original article Investopedia.