Stock of the Day

February 26, 2025

Constellation Energy (CEG)

$252.39
+$0.62 (+0.2%)
Market Cap: $90.63B

About Constellation Energy

Constellation Energy Corporation generates and sells electricity in the United States. It operates through five segments: Mid-Atlantic, Midwest, New York, ERCOT, and Other Power Regions. The company sells natural gas, energy-related products, and sustainable solutions. It has approximately 33,094 megawatts of generating capacity consisting of nuclear, wind, solar, natural gas, and hydroelectric assets. It serves distribution utilities; municipalities; cooperatives; and commercial, industrial, governmental, and residential customers. The company was incorporated in 2021 and is headquartered in Baltimore, Maryland.

Constellation Energy Bull Case

Here are some ways that investors could benefit from investing in Constellation Energy Co.:

  • The current stock price is around $41, reflecting strong market confidence in the company's growth potential.
  • Constellation Energy Co. has secured a 20-year power purchase agreement with Microsoft, ensuring stable revenue and long-term growth.
  • The company is expanding its generating capacity with plans for an additional 900 megawatts of nuclear power, which positions it for significant future growth.
  • With an estimated $14 billion in total liquidity post-acquisition of Calpine Corporation, Constellation Energy Co. demonstrates strong financial health and the ability to invest in further growth opportunities.
  • The company has a targeted annual dividend growth of 10%, providing a reliable income stream for investors while also engaging in share repurchase programs to enhance shareholder value.

Constellation Energy Bear Case

Investors should be bearish about investing in Constellation Energy Co. for these reasons:

  • The high price-to-earnings (P/E) ratio of around 41x may indicate that the stock is overvalued compared to traditional utility companies.
  • Constellation Energy Co. is heavily reliant on long-term contracts with large tech companies, which could pose risks if market dynamics change.
  • Regulatory challenges in the energy sector could impact the company's ability to execute its growth strategies effectively.
  • While the company is expanding, the integration of Calpine Corporation may present operational challenges that could affect performance in the short term.
  • Market volatility in the energy sector could lead to fluctuations in stock performance, impacting investor returns.

As the Magnificent 7 Stalls, These 3 Stocks Are Gaining Momentum

Written By Chris Markoch on 2/21/2025

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In 2023 and 2024, investors didn’t have to look very far to find the biggest market gains. In fact, investing in one or more of a small group of seven stocks, known as the Magnificent Seven, would have delivered gains of over 160% during that time.

In 2025, technology stocks are doing well enough. The NASDAQ index, largely viewed as the technology index, is up about 8% through February 20. The same can’t be said for the Magnificent Seven stocks, which are up just 1% in that time. But that doesn’t tell the whole story. If you remove Meta Platforms Inc. (NASDAQ: META) from the list, the group’s performance would be significantly worse.

The reasons are becoming familiar to investors: stretched valuations, concerns over how capital expenditures on AI will impact earnings, and the impact of higher interest rates on current borrowing.

But until now, there hasn’t been a clear rotation trade. That may be changing, and it’s time for names that growth investors can buy if you want to move some money out of the Magnificent Seven. Here are three names to consider.

Increased AI Demand Gives This Cloud Stock Room to Grow

F5 Inc. (NASDAQ: FFIV) provides distributed cloud services, unified security, networking, and application management solutions, as well as application security and delivery solutions. The company’s products allow customers to simplify app development, security, connectivity, and operations.

In the company’s first quarter of 2025, it delivered revenue of $747 million, which was 7% higher year-over-year. The company raised its guidance for both the second quarter and the full year. At the midpoint of its second-quarter guidance, the company expects to deliver revenue growth of 5% and between 6% and 7% for the full year.

Analysts note that artificial intelligence (AI) is not a significant part of the company’s revenue for now. However, that’s expected to change as AI creates a need to move massive amounts of data in an optimal and secure manner.

FFIV stock is up 20.2% in 2025 and 65.1% in the last 12 months. As of February 20, 2025, the stock was trading above its consensus price target and near the top of its 52-week range. Several analysts have given the stock a much higher price target since the earnings report, including Needham & Co., which raised its price target from $285 to $360.

Tapestry Is a Luxury Your Portfolio Can Afford

Retail stocks have performed unevenly as consumers have had to navigate both sticky inflation and higher interest rates. Luxury goods makers such as Tapestry Inc. (NYSE: TPR) are bucking this trend. Tapestry, which is the home of iconic global brands Coach, Kate Spade New York, and Stuart Weitzman, reported first-quarter earnings with revenue up 5% year-over-year. And the company also delivered a record $2.00 in earnings per share, which was also a 23% year-over-year increase.

Millennial and Gen-Z consumers are leaning into themes like ethical craftsmanship, sustainable manufacturing, and transparency. These are areas that complement Tapestry’s mission.

TPR stock is up 32% in 2025 and 84% for the year. And while the stock is trading above its consensus price, analysts have been moving the stock higher since its earnings report with multiple price targets of over $100.

Some of that growth was due to excitement over the company’s potential deal to buy Capri Holdings Ltd (NYSE: CPRI). The $8.5 billion deal was nixed by the U.S. Federal Trade Commission (FTC). While the potential of the merger may leave some fashion fans disappointed, it appears that it will work out well for shareholders.

Constellation Energy Is a Long-Term Nuclear Energy Story

Constellation Energy Corp. (NYSE: CEG) is up a whopping 144% in the last 12 months, with a 68% increase in the six months ending February 20. Since when did this boring utility company become so exciting?

The answer is the news that Microsoft Corp. (NASDAQ: MSFT) is partnering with Constellation to reopen the Three Mile Island nuclear plant in Pennsylvania. This is part of the nuclear renaissance that’s sweeping through the world as companies look for cost-effective clean energy sources to power the demand that will be needed for AI applications.

There’s good news and bad news for investors. The bad news is that with the price over $300 per share, CEG stock may be overextended. That leaves it susceptible to events like the launch of DeepSeek, which caused shares to plummet approximately 20%. That news also reminded investors that it will take years to reopen Three Mile Island.

However, investors can also see that the dip in CEG stock is getting bought up, which signals underlying conviction in the company. That’s supported by analysts that are raising their price targets above the consensus target.

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