(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — Last year, the utility sector came out of nowhere and demonstrated one of the most enduring lessons about the stock market there is — unexpected things happen all the time. The idea of such a historically defensive sector being caught up in one of the great growth trades of our generation was previously unthinkable. Very few people would have expected it. Utilities have historically been for dividend collectors and those in search of stability, the domain of “widows and orphans.” This forced a lot of more aggressive investors and those trading the AI theme to learn a whole lot of new tickers, myself included. In 2025, the utility sector nearly matched the S & P 500’s return, with a total gain (inclusive of dividends) of 16%. These stocks saw roughly three turns in earnings multiple throughout the course of the year relative to the 20-year historical average PE ratio of 15. Many of the players most involved with powering data centers saw returns of between 20% and 30%. It was an incredible run for a segment of the market that most investors wouldn’t associate with innovation or momentum. But that rally has since taken a pause. There’s been a sector-wide correction, and many leading names have fallen into downtrends as investors rethink their bullishness and the short-term trader crowd moves on to gold miners and semis. This means potential opportunity. Sean thought it would be a helpful exercise to take a peek at some of the utility stocks that have held up best. None of these charts are currently showing breakouts, but they all have near-term support and longer-term uptrends that remain intact. Let’s take a look at American Electric Power (AEP) , NextEra Energy (NEE) and Sempra (SRE) , shall we? Sector leaderboard As of Jan. 20 , there are 207 names on The Best Stocks in the Market list. Top sector ranking: Top industries: Top 5 best stocks by relative strength: Sector spotlight: Utilities Sean — Utilities have become a battleground for political ideologies, which is usually a dangerous place to play. Clean energy projects have been shut down by the executive branch, while AI-related power projects have become targets for local regulators, highlighting the potential cost for higher utility bills. Those negative headlines in congruence with analyst price target downgrades have played a big role in why the utility sector saw a 10% correction as we entered 2026. The market has priced in these risks, and the XLU is now trading at a forward 18x PE, its lowest valuation since “liberation day.” As the market keeps a close eye on regulatory developments, we wanted to highlight the companies that have demonstrated relative strength amid a broader sector sell-off in what could be a promising growth story for the next decade. Before we jump in, we have been all over this topic. Here are a couple previous columns we wrote covering utilities: Aug. 4, 2025 July 28, 2025 Now onto American Electric Power (AEP), NextEra Energy (NEE) and Sempra (SRE). American Electric Power Co., Inc. (AEP): Sean — AEP has a great story. American Electric Power is executing one of the largest grid-modernization programs in the U.S. utility sector, expanding transmission capacity and improving electric reliability. The company has noted rising capacity expectations driven by electrification and data center demand, reinforcing the need for continued investment across its regulated assets. AEP announced a five year capital investment plan totaling $72 billion, which includes customer commitments for 20 gigawatts of additional power by 2030, again driven by data center demand, reshoring of manufacturing and economic development projects. Last but not least, AEP pays a nice 3.12% dividend. Josh — Grade C. It’s messy. I wouldn’t take this one yet. AEP remains above its rising 200-day moving average, preserving the primary uptrend, but it continues to chop around the 50-day, reflecting consolidation rather than strong directional momentum. That 50-day may as well not even be there; buyers and sellers are ignoring it. Momentum (RSI) in the 60’s is strong without being stretched, but I want to see that overhead resistance at $124 to $126 cleaned out. It may take more than one attempt to get through. NextEra Energy, Inc. (NEE): Sean — NextEra Energy has been focused on clean energy. Its Florida Power & Light utility has secured a multiyear plan beginning in 2026 with an authorized return on equity of roughly 11%, providing clarity to investors around regulated cash flows while allowing for continued investment in solar and battery infrastructure. At the same time, NextEra Energy Resources is expanding its growth engine through large renewable and storage agreements with major technology companies. NEE has multiple projects with Alphabet and Meta, and expects about 15 gigawatts of additional power demand for AI-related customers by 2035. Josh — It’s a B minus. Only one number matters on NextEra, tune everything else out. You’re watching $78. The stock in the low 80s is a decent risk-reward here. Obvious overhead resistance at $78 this July and August became a breakout level on Oct. 1. Once it broke out, $78 became support. Look at how beautifully that level held in December and January. If the stock slips back toward $78 and the buyers don’t come in, it’s over. I’d have a stop placed just below. You’re going to run into some congestion here if the recent rally takes us back into the high 80’s. So long as momentum holds up (low 60’s – good but not convincing), it’ll have a shot to break through. I like this one on a short leash, better than AEP anyway. Sempra (SRE): Sean — Sempra mainly operates infrastructure across electric and natural gas systems in California and Texas. While recent headlines have been quieter relative to its peers, Sempra’s long-term story centers on steady rate-base growth, system reliability, and its strategic position in energy delivery markets tied to population growth and the increasing need for electric power. Josh — Sempra is a B plus. It’s another one where the 50-day is more like a guide than a level of importance, but there are less crosses above and below than on the previous charts. There’s less doubt about this one is how I’d think about it. SRE remains in a well-behaved uptrend above its rising 200-day, consolidating beneath resistance near $95. We can’t ignore the elephant in the room, though, so let’s get into that massive gap at the start of the chart above. On February 25th (my birthday) Sempra was the worst stock in the S & P 500, down 20% in a single session. They missed earning badly, triggering a structural reset in Wall Street’s expectations, blaming everything under the sun, from regulatory challenges and higher costs to weaker demand conditions. It was an absolute s***show. If you believe that price has memory, you should not be surprised to see the stock stalling just as it crosses back above that level. SRE has reaffirmed prior guidance and posted quality earnings reports in the three quarters since. I think you can take the trade here. Obvious resistance at $95 which has brought the sellers out repeatedly. On a break above, If I’m long I am doubling my position. For traders, your stop is $85-ish. That’s just below the start of September’s breakaway gap that’s never been filled since. I like the technical setup on this one the best of the three. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. 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