What happened

Shares of NextEra Energy (NYSE:NEE) rose 12.6% in May, according to data provided by S&P Global Market Intelligence. A couple of factors powered the rally in the electric utility stock, including reports that it might bid on a rival utility.

So what

NextEra Energy's stock has been uncharacteristically volatile this year. Shares sold off in March and April as investors worried about how much the COVID-19 outbreak would impact demand for the energy it produces. As things turned out, it was immune, which was evident in the first-quarter results it reported in late April. That gave investors the confidence to buy shares.

A person in a suit with an outstretched hand that has a bright light and upward chart coming out of it.

Image source: Getty Images.

Another confidence booster is that NextEra might be able to take advantage of the economic downturn to enhance its operations and growth prospects. Analysts speculated that the company could use its top-notch balance sheet to acquire smaller rivals. Potential opportunities include renewable energy project developers as well as other utilities. One known acquisition target is Evergy (NYSE:EVRG). Bloomberg reported last month that the company plans to launch a formal sales process in June. NextEra has already hired advisors to prepare an offer for Evergy if it decides to sell.

Now what

Investors began piling back into NextEra's stock last month as concerns about the potential impact of the COVID-19 outbreak on its operations faded. Instead of feeling the effects, the company might benefit from the resulting market dislocation by taking advantage of opportunities to enhance its growth prospects. If it does, the company could grow its earnings and dividend faster than its current outlook.