Why Southern Co. (SO) is a Top Growth Stock for the Long-Term

The energy transition is reshaping the global utility sector, and Southern Company (NYSE: SO) stands out as a strategic leader poised to capitalize on this transformation. With a clear roadmap to achieve net-zero emissions by 2050, the company is leveraging its scale, infrastructure, and partnerships to drive growth in renewable energy, grid modernization, and emerging technologies. For investors seeking long-term value, Southern Co. offers a compelling case rooted in its disciplined capital allocation, robust financial performance, and alignment with decarbonization trends.

Renewable Energy Expansion: A Cornerstone of Growth

Southern Co. is accelerating its transition to a cleaner energy mix, with solar and wind capacity projected to grow by 400% and 500%, respectively, by 2025. This aggressive expansion is supported by a diversified portfolio that includes nuclear, hydroelectric, and renewable natural gas (RNG), ensuring reliability while reducing carbon intensity. The company's investments in battery energy storage systems (BESS) further underscore its commitment to integrating intermittent renewables. For instance, Georgia Power is constructing 765 MW of BESS, while Alabama Power is developing a 150 MW utility-scale storage project at its retired Gorgas plant with new renewable natural gas agreements. These initiatives not only enhance grid resilience but also position Southern Co. to meet rising demand from data centers, manufacturing, and residential customers.

Grid Modernization: Enabling a Sustainable Future

Southern Co. recognizes that modernizing its grid is critical to supporting the energy transition. The company is investing in smart grid technologies, cybersecurity upgrades, and infrastructure resilience to accommodate renewable integration and mitigate risks from extreme weather. By 2027, these efforts will ensure the grid can handle higher shares of solar and wind while maintaining reliability. Additionally, Southern Co. is collaborating with Oak Ridge National Laboratory on a home energy optimization platform, demonstrating its commitment to innovation. Such advancements not only future-proof its operations but also create recurring revenue streams through enhanced service offerings.

Strategic Partnerships: Diversifying the Energy Portfolio

Southern Co. is expanding its influence through strategic alliances in hydrogen and RNG. A 50% hydrogen blend test at Plant McDonough-Atkinson and a €500 million joint venture with HDF Energy in Vietnam highlight its global ambitions in green hydrogen. Meanwhile, partnerships with General Motors to deploy hydrogen fuel-cell trucks and develop microgrids underscore its role in decarbonizing transportation and industrial sectors with new renewable natural gas agreements. On the RNG front, subsidiaries like Virginia Natural Gas and Chattanooga Gas have acquired RNG supplies, reducing lifecycle emissions by 18,978 metric tons of CO₂e. These collaborations diversify Southern Co.'s revenue base and align with regulatory and consumer demands for cleaner energy.

Financial Performance and Analyst Projections: A Solid Foundation

Southern Co.'s strategic investments are translating into strong financial results. In Q3 2025, the company exceeded expectations, reporting adjusted EPS of $1.60 and revenue of $7.82 billion. Analysts project earnings growth of 7.94% annually from 2025 to 2027, outpacing the industry average. A $76 billion investment plan over five years-funded by $7 billion in secured hybrid securities-further reinforces its ability to execute its vision with a detailed earnings call transcript. While the stock is currently rated a "Hold," with a price target of $94.85, the company's long-term guidance of 5-7% EPS growth and a 15.55% projected return on equity by 2028 as projected by analysts suggest significant upside potential.

Conclusion: A Comprehensive Growth Story

Southern Co. is uniquely positioned to thrive in the energy transition era. Its combination of renewable expansion, grid modernization, and strategic partnerships creates a virtuous cycle of innovation and profitability. With a clear net-zero pathway, strong financials, and a regulatory environment favoring clean energy, the company is well-equipped to deliver sustained growth. For investors, Southern Co. represents a rare blend of defensive utility characteristics and high-growth potential-a top-tier long-term investment in the evolving energy landscape.