1. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 79
Vistra Corp. (NYSE:VST) is a retail electricity and power generation company that operates in different segments across the United States. The company serves over 5 million customers with a generation capacity of 41,000 megawatts and engages in various energy-related activities.
Vistra Corp. (NYSE:VST) reported strong Q1 2024 results, with EBITDA from ongoing operations increasing by $259 million compared to the same period in 2023, totaling $813 million. For the full year 2024, the company expects ongoing operations EBITDA to reach approximately $4.8 billion, excluding potential benefits from the nuclear production tax credit.
Vistra Corp. (NYSE:VST) also introduced operational performance improvement (OPI) initiatives aimed at achieving $200 million in annual cost savings collectively by the end of 2026. Analysts are bullish on Vistra Corp. (NYSE:VST) with a “Strong Buy” and a price target of $51.6, reflecting a potential upside of over 17% from the current price levels.
Here’s what Third Point Management said about Vistra Corp. (NYSE:VST) in its Q1 2024 investor letter:
“Vistra Corp. (NYSE:VST) is one of the largest independent power producers (“IPPs”) and retail electricity providers in the country. In 2023, Vistra’s natural gas, nuclear and coal plants generated over 20% of electricity consumed in Texas.
Unlike regulated utilities, where profits are determined by capital invested, Vistra operates in deregulated markets (primarily ERCOT and PJM), where they generate and sell electricity at market prices. Historically, Vistra has been valued at a steep discount to both the regulated utility sector and the broader market in part due to the challenging fundamentals of merchant power. Stagnant domestic electricity demand combined with an oversupply of natural gas has made US electricity prices among the lowest in the world. Meanwhile, significant growth in subsidized renewable generation has created major intraday price volatility in Vistra’s core markets, with power prices sometimes going negative during periods of abundant sunshine or wind. Bankruptcies, including Vistra’s former parent company TXU in 2014, have become commonplace in the sector over the last decade…” (Click here to read the full text)
While we acknowledge the potential of Vistra Corp. (NYSE:VST) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than VST but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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