Scotiabank Names Top Utility Stocks Amid Data Center Growth

Investing.com -- Scotiabank has identified its top picks among U.S. regulated utilities as the sector heads into earnings season, with analysts highlighting strong outlooks despite ongoing market headwinds. The bank's top five selections are Entergy Corporation (ETR), CenterPoint Energy (CNP), Black Hills Corporation (BKH), NextEra Energy (NEE), and FirstEnergy Corp (FE), citing strong growth prospects and potential near-term catalysts.

According to Scotiabank, utilities are expected to deliver bullish updates and confident commentary on guidance and data center trends during the upcoming earnings season. However, analysts noted that favorable weather in the third quarter of 2026, combined with better-than-expected demand trends, should position most utilities to point toward the high end of their 2026 earnings guidance ranges.

Here are Scotiabank's top regulated utility picks:

1. Entergy Corporation (ETR)

Scotiabank assigned a one-year target price of $121.00, representing a potential return of 17.6%. The company benefited from highly favorable weather conditions in the third quarter, with analysts expecting it to be among the largest beneficiaries of increased cooling degree days.

2. CenterPoint Energy (CNP)

With a target price of $46.00 and a potential return of 15.8%, CenterPoint is expected to provide better-than-expected updates. The company recently completed an internal electric transmission study driven by robust load growth, which may result in approximately $10 billion of capital expenditure upside moving into its formal outlook. Scotiabank noted opportunities related to data center development in Texas and Indiana, though risks remain elevated given political pushback.

3. Black Hills Corporation (BKH)

Scotiabank set a target price of $84.00, implying a 13.4% potential return. The company recently announced plans for a Wyoming buildout to serve Google, with management pointing to an approximately 35% earnings uplift by 2030. The company also benefited significantly from favorable third-quarter weather conditions.

4. NextEra Energy (NEE)

With the highest potential return at 27.3% and a target price of $99.00, NextEra has secured deals with the U.S., Japanese, and Korean governments to build new natural gas infrastructure to serve data centers. The company has already provided more than five years of capital expenditure guidance, and management expects near-term deal announcements by year-end.

5. FirstEnergy Corp (FE)

Scotiabank assigned an $53.00 target price, representing an 18.8% potential return. The company's total contracted data centers have increased from 6.4 gigawatts as of the second quarter 2026 call to approximately 8 gigawatts currently. Management expects near-term deal announcements by year-end at the latest.

Scotiabank noted that third-quarter 2026 cooling degree days nationwide were 9% higher than normal and up 16% year-over-year, offsetting unfavorable weather in the first half of the year. The analysts expect sizable capital expenditure increases from several utilities as they invest in infrastructure to support growing demand from data centers and other large loads.

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