We recently compiled a list of the 15 Best Stocks to Buy During Recession.In this article, we are going to take a look at where Xcel Energy Inc. (NASDAQ:XEL) stands against the other stocks.

As per BlackRock, 2025 started with a bumpy ride for the US stocks. That being said, the asset manager believes that the sentiment has been a critical driver, but fundamentals seem to be healthy. This makes up for an optimistic longer-run outlook. Despite the tariff shocks creating difficult markets, the firm is constructive in its outlook and opines that volatility is an opportunity to capitalize on stock dispersion. Furthermore, Asia continues to exhibit a diversification opportunity for making investments in the AI theme, with equities providing low correlation to US counterparts.

Amidst Worries, There Is a Silver Lining

The trade and tariff uncertainty, which fueled the early-year volatility, advanced at the beginning of Q2 due to the US tariff pronouncements, according to the investment management company. This resulted in a global market meltdown and revived fears related to recession. However, as the quarter progressed, the tariff tensions took a backseat, and there was some optimism visible in the broader US markets. The asset manager believes that, while tariffs remain a critical measure, the potential for market-supporting policies like deregulation and corporate tax cuts provides some room for emergent optimism.

The firm highlighted the importance of an active approach in a bid to capitalize on inefficiencies and to make precise and intentional decisions amidst historic change and transition. While the results of bilateral tariff negotiations remain unpredictable, having a pulse on company dynamics, mainly when the macro picture remains unclear, can act as a differentiator for portfolios.

Policy Measures Likely to Support Moving Forward

The firm opines that corporate strength has supported the US equities’ momentum, and it comes through in earnings and market share. As per the firm, relatively pro-industry policies have stimulated healthy FCF. Several companies throughout different time frames have deployed the cash for future business growth. Even though the policy uncertainty in the current time of transition led to the pause in large investment decisions, the company believes that moves toward deregulation and the reshoring of supply chains once policy gets settled can result in the revival of CapEx spending throughout industries, such as technology and industrials. Despite tariffs dominating, the asset manager expects that deregulation and other policy priorities can regain attention. The high drive for innovation is the long-term secular trend that can support the US equities.

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Our Methodology

To list the 15 Best Stocks to Buy During Recession, we considered the stocks from recession-proof industries such as utilities, consumer defensive, and healthcare. After getting an extensive list of 25-30 stocks, we chose the ones popular among hedge funds. Finally, the stocks were arranged in ascending order of their hedge fund sentiments, as of Q4 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).Is Xcel Energy Inc. (XEL) the Most Undervalued Utility Stock to Invest in Now?

A vast expanse of solar panels stretching as far as the eye can see.

Xcel Energy Inc. (NASDAQ:XEL)

Number of Hedge Fund Holders: 37

Xcel Energy Inc. (NASDAQ:XEL) is engaged in the generation, purchasing, transmission, distribution, and sale of electricity. Ross Fowler, an analyst from Bank of America Securities, maintained a “Buy” rating on the company’s stock, and the associated price target was $77.00. The rating was backed by a combination of factors that demonstrate its growth potential despite some short-term challenges. Xcel Energy Inc. (NASDAQ:XEL) has reaffirmed its annual EPS and growth guidance, demonstrating confidence in its financial outlook, says the analyst. Furthermore, the company’s revenue growth, fueled by favorable rate case outcomes and fuel cost recovery, was mitigated by increased operational costs. However, the company has reaffirmed its 2025 ongoing EPS guidance of $3.75 - $3.85.

Xcel Energy Inc. (NASDAQ:XEL) continues to build new generation, invest in system resilience, and has been leading the energy transition. The company reached a milestone in February, when Minnesota regulators approved a resource plan that includes ~5,000 megawatts of new wind, solar, battery storage, and gas by 2030. The company’s capital plan can significantly boost its long-term growth prospects. This can support infrastructure improvements, grid modernization, and expansion into new technologies or markets. The investments can enhance Xcel Energy Inc. (NASDAQ:XEL)’s operational efficiency, improve service reliability, and potentially result in new revenue streams.

Overall XEL ranks 14th on our list of the best stocks to buy during recession. While we acknowledge the potential of XEL as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than XEL but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.

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