Martin Zweig's Growth Investor Model Identifies NEE as a High-Ranking Stock

Nextera Energy Inc. (NEE) is a large-cap growth stock in the electric utilities industry. According to the Growth Investor model based on Martin Zweig's strategy, NEE rates highest with a 69% score. The model looks for growth stocks with persistent accelerating earnings and sales growth, reasonable valuations, and low debt. NEE passes some tests, such as a positive earnings growth rate for the current quarter and long-term EPS growth, but fails others, such as sales growth rate and earnings persistence.

Nextera Energy Inc. (NEE) has been a standout performer in the electric utilities sector, with notable gains in the quarter-to-date period. According to TradingView, NEE has seen a 2.1% increase in stock price, outpacing the industry average of 1.8% NextEra Outperforms Industry Quarter to Date: How to Play the Stock?^[1]. This performance can be attributed to several key factors, including strong operational performance, expanding customer base, and declining interest rates that are expected to lower capital costs.

One of the primary drivers of NEE's success is its commitment to clean energy growth. The company's subsidiary, NextEra Energy Resources, plans to add 36.5-46.5 gigawatts (GW) of renewable capacity between 2024 and 2027, with a significant investment of $25 billion from 2025 to 2029 NextEra Outperforms Industry Quarter to Date: How to Play the Stock?^[1]. Additionally, Florida Power & Light (FPL), a subsidiary of NEE, operates a vast transmission and distribution network, with plans to invest $21.68 billion between 2025 and 2029 to expand and modernize its infrastructure NextEra Outperforms Industry Quarter to Date: How to Play the Stock?^[1].

NEE's balanced generation portfolio, which includes wind, solar, nuclear, and natural gas, provides a stable foundation for long-term growth. In 2024, FPL generated 69% of its power from natural gas, 20% from solar, 10% from nuclear, and 1% from other sources. Meanwhile, Energy Resources derived 64% of its output from wind, 17% from nuclear, 15% from solar, and 4% from other sources NextEra Outperforms Industry Quarter to Date: How to Play the Stock?^[1].

The company's earnings estimates are also moving up, with expectations for 2025 earnings per share (EPS) in the range of $3.45-$3.70, compared to $3.43 a year ago. The Zacks Consensus Estimate indicates year-over-year growth of 7.29% and 7.95% for 2025 and 2026, respectively NextEra Outperforms Industry Quarter to Date: How to Play the Stock?^[1]. This growth is supported by a strong return on equity (ROE) of 12.31%, which is higher than the industry average of 10.14% NextEra Outperforms Industry Quarter to Date: How to Play the Stock?^[1].

NEE's stock is currently valued at a premium compared to its industry peers, trading at 18.28 times forward 12-month earnings (P/E) compared to the industry average of 14.63 NextEra Outperforms Industry Quarter to Date: How to Play the Stock?^[1]. Despite this premium, the company has maintained a consistent dividend policy, with plans to increase the dividend rate annually by 10% through 2026 NextEra Outperforms Industry Quarter to Date: How to Play the Stock?^[1].

Institutional investors have shown interest in NEE, with Meiji Yasuda Asset Management Co Ltd. reducing its stake by 24.1% but still holding 252,518 shares worth approximately $17.9 million Meiji Yasuda Asset Management Co Ltd. Sells 80,100 Shares of NextEra Energy, Inc. $NEE^[2]. Other institutional investors, such as North Wealth Services LLC and IMA Advisory Services Inc., have also taken new positions in NEE during the first quarter Meiji Yasuda Asset Management Co Ltd. Sells 80,100 Shares of NextEra Energy, Inc. $NEE^[2].

However, NEE's performance does not align perfectly with the Growth Investor model based on Martin Zweig's strategy. While the company passes tests for positive earnings growth rate and long-term EPS growth, it fails others, such as sales growth rate and earnings persistence . This discrepancy highlights the importance of considering multiple factors when evaluating a stock's growth potential.

In conclusion, Nextera Energy Inc. (NEE) has demonstrated strong performance and growth potential, driven by its commitment to clean energy, expanding infrastructure, and robust earnings estimates. Despite a premium valuation, the company's consistent dividend policy and institutional interest make it an attractive investment. However, investors should be mindful of the stock's failure to meet certain criteria in the Growth Investor model and consider other factors when making investment decisions.