10 Cheap Clean Energy Stocks To Buy According to Hedge Funds

1. Vistra (NYSE:VST)  

Number of Hedge Fund Investors: 92  

Forward P/E Ratio as of September 8: 15.08

Vistra (NYSE:VST) is a Texas-based energy company with a vertically integrated business model. It operates across various segments of the energy sector, including electricity generation, wholesale energy sales, fuel production, and logistics. The company provides electricity and natural gas to residential, commercial, and industrial clients. Additionally, Vistra manages battery energy storage facilities and its nuclear assets are crucial for powering artificial intelligence (AI) applications.

In March 2024, Vistra (NYSE:VST) completed its acquisition of Energy Harbor and significantly boosted its nuclear capacity by 4,000 megawatts while adding around 1 million retail customers to its portfolio. The company has also integrated AI technologies into its operations to improve power plant efficiency, enhance thermal performance, and cut carbon emissions. Notably, the implementation of the Heat Rate Optimizer (HRO) across nearly 67 power-generation units in 26 plants led to an average efficiency improvement of 1%, saving the company millions in operational costs. As demand for renewable energy grows, especially driven by AI and data centers, Vistra (NYSE:VST) is strategically well-positioned to benefit from this trend.

For the quarter ending June 30, Vistra’s (NYSE:VST) operational net income rose to $492 million, up from $409 million the previous year. The company’s Adjusted EBITDA also saw a significant increase of 40%, reaching $1.41 billion compared to the same quarter in the previous year.

Vistra’s (NYSE:VST) stock is trading 15.08 times its earnings, which is an almost 13% discount compared to the sector median of 17.16. The company’s earnings are expected to grow by 40.17% this year. As of the second quarter, 93 hedge funds hold stakes in Vistra’s (NYSE:VST) stock with stakes worth $4.03 billion as of the second quarter. Lone Pine Capital is the largest shareholder with stocks worth $587.93 million as of June 30.

While we acknowledge the potential of Vistra (NYSE:VST)  to grow, 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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