Is New Jersey Resources (NJR) an Overlooked Boring Stock?

Investment management company First Pacific Advisors recently released its “FPA Queens Road Small Cap Value Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. The Fund returned -0.36% in Q4 2025, compared to the Russell 2000 Value Index’s 3.26%. In 2025, the Fund has returned 13.36% compared to 12.59% gain for the Index. The Fund outperformed in the first half of 2025, when markets were weak and volatile. However, in the second half of 2025, markets favored speculative and low-quality stocks, leading to the Fund’s underperformance. The portfolio is designed to protect clients from market drawdowns by focusing on quality and value. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, FPA Queens Road Small Cap Value Fund highlighted stocks like New Jersey Resources Corporation (NYSE:NJR). New Jersey Resources Corporation (NYSE:NJR) is an energy services company. On February 12, 2026, New Jersey Resources Corporation (NYSE:NJR) stock closed at $53.74 per share. One-month return of New Jersey Resources Corporation (NYSE:NJR) was 11.70%, and its shares are up 17.67% over the past twelve months. New Jersey Resources Corporation (NYSE:NJR) has a market capitalization of $5.42 billion.

FPA Queens Road Small Cap Value Fund stated the following regarding New Jersey Resources Corporation (NYSE:NJR) in its fourth quarter 2025 investor letter:

"Below are three examples where, we believe, an uncrowded arena has created opportunity. All three are stocks that we have owned for a long time and that have performed well for the Fund. Their businesses haven’t changed much, but their valuations (market multiples) have come down with the ebbing small cap tide. is roughly: The likely explanation As small (and SMID) cap strategies see outflows, there isn’t another natural cohort of investors who want to buy high quality but boring small businesses at reasonable valuations. While no one was paying attention, earnings grew faster than the stock prices appreciated, pushing down their multiples and pushing up expected returns. We think all three are attractive opportunities at the current prices.

New Jersey Resources Corporation (NYSE:NJR) is a regulated gas utility serving Morris, Ocean and Monmouth counties in New Jersey. New Jersey has a favorable utility regulation environment – NJR gets a 9.6% allowed ROE and realizes practical cost reimbursement mechanisms that show up in the GAAP financials. The company has a culture of disciplined but ambitious capital allocation at the holding company level and has diversified into clean energy, FERC-regulated storage and pipelines and energy services and trading. NJR earns a mid-double digit ROE, strong for a utility holding company. All in, NJR has a history of high single digit EPS growth on top of its 50%+ dividend payout ratio.

Incredibly, the Fund has owned shares in NJR since inception in 2002. And like SNX and RLI, the company has grown and evolved but hasn’t fundamentally changed over the last ten years. Yet its forward P/E multiple has declined from 20x to 15x (blue line below). We believe this is another case of an overlooked, “boring” stock and think shares in NJR are attractive."

New Jersey Resources Corporation (NYSE:NJR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 32 hedge fund portfolios held New Jersey Resources Corporation (NYSE:NJR) at the end of the third quarter, up from 29 in the previous quarter. While we acknowledge the potential of New Jersey Resources Corporation (NYSE:NJR) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered New Jersey Resources Corporation (NYSE:NJR) and shared a list of best hydrogen and fuel cell stocks to buy for 2026. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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