1. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Investors: 79
Texas-based electricity company Vistra Corp. (NYSE:VST) is one of the best AI utilities stocks to buy now according to hedge fund investors. The stock has already gained about 168% this year through May 27. Vistra Corp. (NYSE:VST) earlier this month upped its dividend by 1.2% (second dividend increase this year), and also became part of the S&P 500, replacing Pioneer Natural Resources.
Earlier this month Morgan Stanley published a list of stocks poised to benefit from productivity opportunities because of AI. Vistra Corp. (NYSE:VST) was part of the list.
Vistra Corp. (NYSE:VST) CEO Jim Burke talked about data centers and clean energy opportunities while answering a question during Q1 earnings call:
“We started our process, actually, last year looking at the time, it was a perspective close of Energy Harbor, which of course is now in the rearview mirror, which is great. And of course, the Talon AWS deal came out early March. So that was certainly a benchmark and a watershed event for the industry. I will say the two unit sites still have, this is an order of preference that I think the market is grappling with. The two unit sites have more desirability for what their redundancy can provide. Then there’s the single unit sites, of course. And then there’s the gas plants. So what’s been very interesting, David, about our discussions with potential partners is we have normally sort of tried to search for opportunities for us to find partners and bid into their energy needs.
Now this has been reversed. We actually have partners, potential partners coming to us directly. And speed is really very important to them. I would say gas has become as interesting to many of them as nuclear has, in fact, even a preference for some. So from our standpoint, all options are on the table with 40,000 megawatts. And, you know, we’ve got obviously 12 states and 40,000 megawatts that we can do some of our projects with. But we’ve actually flipped it a little bit. So we’ve actually put out some RFPs ourselves. So instead of just responding to the inbounds, we’ve actually gone out to the marketplace to handle actually multiple conversations simultaneously and see what the best opportunity might be for us. And so that process is not concluded yet, but we’re in the middle of that process.”
Read the full earnings call transcript here.
Third Point Management stated the following regarding Vistra Corp. (NYSE:VST) in its first quarter 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)
Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also look at the 10 Best Dividend Stocks of 2024 and the 10 Best AI Stock Picks of Billionaire Steve Cohen.
If you are looking for an AI stock that is as promising as Microsoft but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Michael Burry Is Selling These Stocks and Jim Cramer is Recommending These Stocks.
Disclosure: None. This article is originally published at Insider Monkey.
