1. Vistra Corp. (NYSE:VST)
Year To Date Share Price Gain: 229%
Number of Hedge Fund Investors in Q2 2024: 92
Vistra Corp. (NYSE:VST) is a Texas based electricity utility. This means that it benefits from the ability to set prices due to not having to deal with regulators. Vistra Corp. (NYSE:VST) accounts for roughly one fifth of Texas’ electricity generation, which provides it with key economies of scale to keep costs low. It also has exposure to the AI data center industry because of the fact that clean sources such as nuclear play a key role in its power generation portfolio. In fact, Vistra Corp. (NYSE:VST) has had its eye on the ball for more than a year when it comes to nuclear power generation. Back in 2023, the firm created a new entity after buying nuclear generation assets. It bought the remaining assets in this entity this year, and the day the deal was certain, Vistra Corp. (NYSE:VST)’s shares soared by a cool 25%. In fact, Vistra Corp. (NYSE:VST)’s year to date share price gain of 229.10% means that it has beaten NVDA’s 179.84% gain, hinting that perhaps the era of Goldman Sachs’ phase two AI stocks is already with us. Its shares have also been helped by record grid payouts in the US utility industry this year.
Fidelity Investments mentioned Vistra Corp. (NYSE:VST) in its Q2 2024 investor letter. Here is what the fund said:
“An overweight stake in utility company Vistra Corp. (NYSE:VST) (+24%) was the top individual relative contributor. In Q1, the Texas-based independent power producer completed its acquisition of Ohio-based nuclear fleet operator Energy Harbor. The new Vistra, with its expanded geographic footprint, is in strong position to gain from the buildout of AI-capable data centers, which require enormous amounts of power to run. It is expected that local grids in the U.S. will need to invest heavily over the coming years to improve their power infrastructure and meet growing demand. In the nearer term, firms may choose to contract with independent power producers, like Vistra, rather than rely on the local provider.”
VST is one of the top phase two AI stocks according to Goldman Sachs. While we acknowledge the potential of VST as an investment, our conviction lies in the belief that some 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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