We recently compiled a list of the 10 Best Performing Stocks in 2024. In this article, we are going to take a look at where Vistra Corp. (NYSE:VST) stands against the other great-performing stocks.
Dow Breaks Record
The Dow Jones Industrial Average has recently made headlines by closing above the 42,000 mark for the first time, a significant milestone that reflects a surge in investor confidence following a substantial interest rate cut by the Fed. This momentous achievement occurred on September 19, when the Dow jumped over 500 points, closing at 42,063.36. This rise was part of a broader trend in the stock market, with major indices experiencing overall gains throughout the week, largely fueled by optimism surrounding the Fed’s decision to lower interest rates by 0.5%.
On September 21, Edward Yardeni, president of Yardeni Research, while acknowledging that the market tends to keep rising, also discussed the warning signs of a melt-up, in the context of the markets’ response to the September rate cut on CNBC’s ‘Closing Bell’. He doubted the necessity of such a large rate cut, suggesting that the economy is currently growing at about 3% year-over-year and could potentially grow even faster. Yardeni noted that while productivity gains are expected to be more pronounced shortly, he would have preferred to see the market stabilize for a while instead of continuing its upward trajectory.
Yardeni provided his forecast for the market’s potential growth. In his base case scenario, he predicted that the Dow could reach 5,800 possibly by next week. However, he also entertained an alternative scenario where the market might exceed 6,000 before experiencing a correction. Still, he does not foresee a bear market as a recession is unlikely.
While discussing investment strategies, Yardeni highlighted that with small-cap and mid-cap stocks showing signs of improvement in valuations, there is an indication that investors should consider diversifying their portfolios beyond large-cap stocks. However, concerns remain regarding mid-cap earnings, which have not shown significant growth recently. Lower interest rates might eventually provide some uplift to these earnings.
Chicago Fed President Austan Goolsbee has indicated that many more rate cuts may be necessary over the next year due to signs of weakness in the manufacturing sector. CNBC’s Rick Santelli, who was reporting on September 23, noted that while manufacturing has faced challenges, there are indications it might be recovering slightly, as evidenced by a recent production increase of 0.8%.
He referenced comments from Treasury Secretary Janet Yellen, who stated that the economy is experiencing strong growth and robust consumer spending, which he believed contradicted the concerns raised by Goolsbee. Santelli pointed out that the Dow Jones Industrial Average is currently at all-time highs, suggesting that market sentiment remains positive despite underlying economic weaknesses.
Further discussing the economic landscape, he remarked on the currency markets, noting that the US dollar has fallen to its lowest level since March 2022. In contrast, the euro has reached its strongest level since April 2022. This shift in currency dynamics reflects broader economic trends, with Santelli suggesting that Germany’s economic situation appears significantly weakened compared to its previous state.
On the topic of interest rates, Santelli reported that since Tuesday’s market close and following the Fed’s easing on Wednesday, two-year note yields have decreased by 3 basis points, while ten-year note yields have increased by ~9 basis points. He emphasized the importance of monitoring these changes closely as they could indicate shifting investor sentiment regarding future economic conditions.
While Santelli’s discussion underscores a complex economic environment where mixed signals from various sectors create uncertainty, the Dow continues to hover around its record highs and investor sentiment remains cautiously optimistic. Market participants are closely monitoring economic indicators and Fed policies to capture future trends. In this context, we’re here with a list of the 10 best-performing stocks in 2024.
Methodology
We used stock screeners to look for companies trading over $10 billion. We then selected the top 10 stocks with the best year-to-date performance and that were also the most popular among elite hedge funds. The stocks are ranked in ascending order of their year-to-date performance.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Solar panel workers installing a new farm for clean energy generation.
Vistra Corp. (NYSE:VST)
Year-to-Date Performance as of September 23: 188.06%
Market Cap as of September 23: $38.06 billion
Number of Hedge Fund Holders: 92
Vistra Corp. (NYSE:VST) is a Fortune 500 integrated retail electricity and power generation company, focused on providing essential energy services. It operates a diverse portfolio of power generation assets, including coal, natural gas, nuclear, and renewable energy sources, playing a vital role in meeting the energy needs of millions of people and businesses across the US.
The company is acquiring an additional 15% equity interest in its subsidiary, Vistra Vision LLC, for $3.2 billion. The purchase will be completed through 5 transactions over 2 years. Vistra Vision owns nuclear generation facilities (6.4 GW), renewables, energy storage, and retail businesses.
It expanded its nuclear power capacity and retail customer base in March by acquiring Energy Harbor for $3.43 billion. Additionally, the company received approval to extend the operation of its Comanche Peak Nuclear Power Plant through 2053, securing reliable zero-carbon electricity generation for another 20 years. Building on such expansions, the company was able to grow revenue by 20.57% year-over-year in Q2 2024.
Its AI-powered Heat Rate Optimizer has been implemented in 67 power-generation units, improving efficiency by an average of 1% and saving over $23 million annually. It has helped reduce carbon emissions, contributing to the company’s goals of a 60% reduction by 2030 and net-zero emissions by 2050.
US data center electricity consumption is projected to increase by 30% from 2022 to 2026, contributing to a 6% rise in the nation’s overall power consumption. Globally, data center energy use is expected to double in the same period. This represents a significant increase in the energy share of data centers, ranging from 3% to 10%. This growth will greatly benefit Vistra Corp. (NYSE:VST), and position it as an industry leader as data centers look for signing power purchase deals with nuclear power providers.
Meridian Hedged Equity Fund stated the following regarding Vistra Corp. (NYSE:VST) in its Q2 2024 investor letter:
“Vistra Corp. (NYSE:VST) is an integrated retail electricity and power generation company with operations across 20 U.S. states and Washington D.C. We identified Vistra as a likely beneficiary of the projected growth of power-hungry data centers, spurred by the rise of generative AI, increasing electricity demand, and higher power prices. The stock performed well after the company delivered stronger than expected earnings. Management also provided forward guidance that exceeded investors’ expectations and reaffirmed shareholder-friendly plans for sizable share repurchases through 2025. We trimmed our position in the quarter following the strong performance and continue to see strong long-term prospects for the company.”
Overall VST ranks 5th on our list of the best performing stocks in 2024. While we acknowledge the potential of VST as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high 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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Disclosure: None. This article is originally published at Insider Monkey.