2. Vistra Corp. (NYSE:VST)
Stock Price as of August 16: $80.14
Average Analyst Price Target Upside as of August 16: 46.62%
Vistra Corp. (NYSE:VST) is a U.S.-based prominent independent power producer, operating across 20 states and the District of Columbia. It operates as an integrated retail electricity and power generation company and delivers essential energy resources to households, businesses, and communities. It is among our best defensive stocks to buy now.
The company’s generation assets total around 37,000 megawatts and include a broad mix of energy sources such as natural gas, nuclear, coal, solar, and battery storage. Additionally, its retail operations involve selling electricity and natural gas directly to consumers, while it also participates in the wholesale electricity market.
Vistra (NYSE:VST) is well-positioned to thrive in the evolving energy landscape, particularly as global electricity consumption continues to climb. According to the International Energy Agency (IEA), data centers, which used 460 terawatt-hours (TWh) of electricity in 2022, are expected to see their energy needs double to over 1,000 TWh by 2026.
In the U.S., which houses a significant share of these data centers, electricity use is forecasted to increase from 200 TWh in 2022 to 260 TWh by 2026. This surge in demand represents about 6% of the nation’s total power consumption. The company is well-equipped to meet this rising demand due to its diverse energy generation portfolio. Its energy source mix gives it an edge as the energy market shifts toward lower-carbon solutions.
Vistra’s (NYSE:VST) acquisition of Energy Harbor, which brought nuclear power assets into its fold, improves its ability to create direct power purchase agreements with major clients, which can further strengthen its market presence.
With its strong brands like TXU Energy and a well-diversified energy generation portfolio, the company remains a formidable player in the energy sector. It is set to capitalize on the increasing power demand, driven by its mix of sustainable and efficient energy sources, making sure it stays competitive and continues to grow.
As per the consensus opinion of 13 analysts that have covered Vistra (NYSE:VST), it has a consensus Buy rating. The average price target of $117.50 represents an upside of 46.62% from the current levels, as of August 16.
Meridian Hedged Equity Fund stated the following regarding Vistra Corp. (NYSE:VST) in its first quarter 2024 investor letter:
“Vistra Corp. (NYSE:VST) is an integrated retail electricity and power generation company based in Irving, Texas. It operates in 12 states and six of the seven competitive markets in the U.S. Vistra’s retail brands serve approximately 2.9 million customers and its power generation fleet totals approximately 41,000 megawatts of natural gas, nuclear, coal, and solar facilities. Vistra was a top performer in the strategy over the past quarter, with its shares rallying over 80%. A key driver has been the thesis that the projected growth of power-hungry data centers, spurred by the rise of generative AI, will increase electricity demand and power prices. This is expected to significantly benefit incumbent power generators like Vistra. The company’s efficient generation portfolio, especially its nuclear and natural gas plants, is well-positioned to capitalize on rising demand, scarcity pricing, and ancillary services in the Texas power market. Vistra is also pursuing opportunities to potentially sign high-margin power offtake agreements directly with data center customers for its nuclear plants, similar to a recent deal by peer Talen Energy and Amazon. We continue to like Vistra’s strong free cash flow generation supporting continued share buybacks and debt reduction, synergies from the recent Energy Harbor acquisition, and a favorable power market backdrop with rising spark spreads. We trimmed the stock following its strong performance during the period.”
