After last week’s outperformance, there is a new 2025 sector champ
(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — If I asked you what is the most important geographic location on earth for the modern internet, you might be tempted to guess Silicon Valley or perhaps somewhere in Asia. You’d be wrong. Believe it or not, it’s in Loudon County, Virginia, known by the locals as “Data Center Alley.” The Alley is home to the world’s largest cluster of data centers. According to the Wall Street Journal, approximately 70% (SEVENTY PERCENT!) of the entire world’s internet traffic passes through this Northern Virginia cluster every day. And the build-out in this region is not nearly complete. Data centers use a ton of electricity, which means that whomever is supplying that electricity is looking at an ocean of demand as far as the eye can see. With that in mind, it’s time to introduce you to a new name on our Best Stocks in the Market list — Dominion Energy (D) . The story here is incredibly simple. Thirty years ago, when the consumer internet was born, the majority of its users were gaining access via America Online. AOL was based in a suburb of DC and moved itself to Ashburn, VA — right in the heart of Loudon County. This was the birth of the data center and, to this day, it remains ground zero for newly contracted gigawatt (GW) demand. Amazon invested $52 billion in Loudon County data center infrastructure between 2011 and 2021 and has committed to spending another $35 billion between now and 2040 on an estimated 42 million square feet. Dominion is supplying the bulk of the electricity needed, with an estimated 9 GW of data center load under service contracts and another 5 GW in newly signed construction letters. In addition to AWS, Dominion is also serving Meta, Microsoft’s Azure and the Google Cloud. This past July, Dominion formally announced a rate increase proposal to its regulators in part stemming from its crucial work on behalf of the AI-enabled data center buildout happening on its turf. It wants more money to support the new demand as well as to continue serving its 4.1 million customers. A decision is expected to come this September, which could serve as a major catalyst for the stock should it go into effect this January. In the meantime, you have a stock approaching new 52-week highs with a 4.4% dividend yield while you wait. Sean’s going to get into some broader commentary about what’s going on with the Best Stocks list below. I’ll be back with some risk management commentary should the trade not work out. Sector Spotlight Sean —Continuing with our focus on utilities last week, we had a new entrant hit our list on Friday while the rest of the market was selling off. With this new addition, which we will discuss in further detail below, utilities are now tied for the 3rd most populous sector on our list. There is a total of 16 utility companies out of 152 on the Best Stocks in the Market: Taking a look at the industry makeup, the electric utilities industry is tied for the 3rd most populous with 9, and the multi utilities industry is tied for 7th with 5 companies on the list. Last week , we compared utility breadth to the S & P 500. Instead, let’s compare to the all-mighty tech sector. AI seems to be everywhere. The “AI is the only thing keeping the market afloat” memes are rampant, and although that is a fair observation, utilities are lighting it up compared to tech. No matter how you slice and dice the data, utilities are seeing momentum right now. As of Friday’s close, the median utility stock has an RSI of 64. 90% of utes are above their 20- and 200-day moving average, 94% are above their 50 day moving average. The median utility stock is within 3% of 52-week highs. Compare that to tech: the median RSI is 41. Only 38% of tech is above their 20-day moving average, 47% are above their 50-day and 57% are above their 200-day moving average. The median tech stock is 14% below 52 week highs. In other words, despite all the hype about the tech sector, the typical stock in the group is only about 6% away from a bear market. Last week, utilities were the second-best-performing sector YTD. Well, we have a new sector in pole position: We are long-term investors. Our default setting is optimism. Two positive reflections from this analysis: first, AI will affect a lot more companies than just tech firms, and the market is pricing in that reality. Which leads to thought number two: there is still a catch-up trade to be had, even in tech. Most stocks have not performed well over the past year; only a select few are leading us higher. 295 stocks are underperforming the S & P 500 YTD, representing 59% of the index. Rotation is healthy, and if we see some of the sleepier, value-oriented sectors wake up, we could be in for a great second half of the year. One stock that just hit our list, with what looks to be a great set-up for the second half of 2025, is yet another utility: New addition to Best Stocks: Dominion Energy Date added: 08/012025 Sean — Dominion Energy is a multi-utility stock paying a 4.42% dividend, making it a top-50 dividend payer in the S & P 500. D has 27,000 MW of generation capacity from a diversified portfolio of nuclear, natural gas, coal, hydro, solar and offshore wind energy projects. The company also acts as one of the nation’s leading developers of renewable energy — Its Coastal Virginia Offshore Wind project is under construction off the Virginia coast. The company reported earnings on Friday, beating on revenue and EPS expectations, vaulting the stock onto our list. From that earnings call, management reaffirmed guidance on earnings, its creditworthiness, and its dividend payout. They also gave investors an update on the Coastal Virginia Offshore Wind project. The project represents “the fastest and most economical way to deliver nearly 3GW to Virginia’s grid to support America’s AI and cyber, shipbuilding, and military + defense preeminence” via Dominion’s earnings presentation. This project has rare bipartisan support from both the state of Virginia and Congress. The project is fully state and federally permitted, and is 60% completed, with an expected completion date of 2026. This project will deliver substantial electricity to Virginia’s grid to support America’s data center market, military installations, and shipbuilding operations, which positions Dominion to capitalize on data center demand in its service territory. Management noted that “9 of our top 10 all-time peak days in Virginia have occurred this year.” (data via Quartr) As demand for power accelerates, more and more companies are primed for the next move higher. Scale, stability, and energy diversification are quietly leading the market higher in 2025. Risk management Josh — Let’s not make this more complicated than it needs to be. The utility sector is extremely strong as Sean has shown above. Dominion is emerging as one of the strongest stocks in the sector. This is the kind of tailwind you want when considering a new position. Below I am showing you a five-year chart with a 200-week moving average which the stock is now challenging: A weekly closing price below $50 means something may have changed. Traders can use that as their pivot point while longer-term investors may want to just grit their teeth and live through it — a decline like that would only make the dividend yield even more juicy. In its last earnings report, Dominion reaffirmed full year guidance so I feel good about the opportunity remaining intact going into the fall rate case decision. Good luck out there. DISCLOSURES: None All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. 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