An Unlikely Outperformer: Unpacking The Utility Sector’s Quiet Growth Story

30‑Second Take

An outperformer with a technical breakout loading: CenterPoint has been outperforming the utility pack throughout 2025.

It’s up ~21% YTD vs ~12% for the sector. After a soft Q2, management has reaffirmed full-year guidance and flagged an earnings acceleration expected to hit in the latter half of the year.

Pair that with heavy capital investment in electrification and grid resilience (both areas currently benefiting from AI-driven data center demand), and you have a regulated utility showing growth-stock traits.

CNP is coiled just under a technical breakout at $39.30, with the potential to run hot if momentum continues to build.

Trade Setup

Time frame: Position play over the next 6–12 months as earnings acceleration materializes.
Edge type: Growth tailwinds in a defensive sector; technical breakout trigger.

Snapshot Table

Chart

The last month at a glance: CNP dedicated the previous month to rebounding from underwhelming Q2 results, with the stock repeatedly testing resistance in the $39 range.

Trading volumes picked up on up-days, hinting at institutional accumulation, while dips were shallow and quickly bought.

The result is a steady uptrend that has CNP coiled just below a breakout point.

Bull Case 

A powerhouse in its field: CenterPoint isn’t a giant on the global stage. In fact, you might not have even heard of this Midwestern energy provider, but in its core markets, it's a powerhouse.

It provides electricity and natural gas to more than 7 million residential and business customers across four states (Indiana, Minnesota, Ohio, and Texas), with a scale that generates steady cash flow year after year. 

The company’s multiyear capital investment program is designed to harden the grid, expand capacity, and capture growth from booming data center demand.

That scale translates to consistency for your portfolio.

Utility earnings are typically characterized by stable returns rather than fireworks, but CNP is aiming to achieve 6–8% annual EPS growth through 2030, which is above average for the sector.

An earnings acceleration: Multiple sparks are flying for CNP. The near-term setup is focused on the earnings acceleration expected in the latter half of 2025.

Management is also investing billions in grid upgrades and capacity expansion to meet the demand for AI-fueled data centers, EV charging, and electrification.

Price targets suggest room to grow: Analysts have set a high price target of $44.00 for CNP, with a low of $34.00. It’s trading just under the average consensus target of $40.31 today.

Coasting on twin tailwinds: CenterPoint is operating in a sweet spot where defensive utility stability meets secular growth.

The company is well-positioned to benefit from the soaring electricity demand driven by data centers and AI, as well as the long-term push toward electrification and resilience upgrades.

Regulators are broadly supportive of grid modernization, giving CNP room to expand its rate base and sustain growth.

Add in its above-sector EPS growth target of 6–8%, and CenterPoint has the wind at its back in ways most peers can't match.

Bear Case 

Tight regulations could cap earnings: CenterPoint's most significant risk is that utilities don’t have unlimited growth levers, meaning regulators cap earnings, and cost recovery can take time.

Add in higher financing costs from an elevated rate environment and the lingering sting of a Q2 miss, and the pressure is on for management to deliver that promised second-half rebound. 

Electrification and grid investment are highly competitive: CenterPoint operates in a crowded field of regulated utilities, competing with prominent names such as WEC Energy Group, Dominion, and Evergy.

All of them benefit from the same themes of electrification and grid investment, resulting in fierce competition for customers. 

The elephant in the room: Even with solid execution, CenterPoint can’t escape the broader pressures facing utilities.

Yep, you have heard every company in the country bemoan higher interest rates, but that’s because they are a major headache for ambitious businesses.

Higher borrowing costs make it more expensive to fund the massive capital projects utilities need, and investors often rotate away from the sector when bond yields look attractive. 

Utilities firms across the board are also forced to contend with increasingly volatile weather patterns that can spike expenses and damage infrastructure.

At the same time, political pressure to keep bills affordable adds another layer of uncertainty.

Valuations could fall if the expected growth spurt fails. Management has set high expectations for the latter stages of the year, but could they be setting the stage for a fall?

After missing Q2 estimates, there is always a danger that the second half of the year could also fall short. If those numbers do disappoint, the stock’s valuation could unwind quickly.

Quick Checklist 

✅ Thesis still valid after today’s close
✅ Volume confirms move above key levels
✅ Catalyst date double-checked (September 23, 2025)

Deep‑Dive Links

• Q2 2025 Earnings 

• Analyst Ratings and Price Targets

• Short Interest Data

• Company Profile and Investor Relations

That’s all for today’s Everyday Alpha. We’ll have a new pick for you every morning before the market opens, so stay tuned!

Best Regards,
—Noah Zelvis
Everyday Alpha