We recently published a list of 10 Best Stocks to Buy and Hold For 5 Years. In this article, we are going to take a look at where Vistra Corp. (NYSE:VST) stands against other best stocks to buy and hold for 5 years.
Is Corporate America Celebrating the New Administration?
On November 7, Reuters reported that stocks in the United States were higher than usual after the Fed announced a 25 basis point rate cut, extending the rally fueled by the election results. The Fed decision came promptly after the job market showed signs of easing and inflation moved towards the Central Bank’s target of 2%. Most investors expect the new administration to ease taxes and regulations, all of which sparked all three of the major indexes. The S&P 500 and Dow, each logged their largest one-day percentage jumps in two years.
Now that the elections are over, investors are keen to know how will markets perform amid election results. On November 8, Bethany McLean, contributing editor at Vanity Fair, joined Catalysts on Yahoo Finance to discuss why businesses may be optimistic as the new president takes over the White House.
McLean emphasizes that investors foresee a myriad of benefits such as tax cut extensions, fewer regulations, and less aggressive antitrust oversight, all of which have sparked a surge in markets. Despite the possible benefits, she emphasizes it is difficult to predict what the administration is going to do at the moment.
McLean expects the new administration to be friendlier with companies in the technology sector, however, she remains fixated on waiting to see how the policies play out. She further adds that if any future policies made by the new administration negatively impact the stock market, she expects them to “switch course.”
On the flip side, some analysts maintain that the easing cycle has a greater bearing on the stock market than the elections, hinting that value names may be more important as of now. On November 7, Arup Datta, senior vice president at Mackenzie Global Quantitative, joined Wealth! on Yahoo Finance to share his market thesis as the 2024 elections come to a close.
Datta shares that he is extremely positive about the market but emphasizes that the win will have little impact on financial markets in the long term. Speaking of the magnificent seven, he adds focusing on quality names with positive growth and value for his investment portfolio helps him navigate the market in such conditions.
He suggests that while the magnificent seven have been the talk of the town for the past 18 to 21 months, he would like to “pivot away” from that by a little. Historically, value stocks have performed better amid an easing cycle, adds Datta.
As the new administration settles in and the Fed initiates its second cut of the cycle, the near-term market will most likely remain volatile. Speaking of the future, some names happen to promise long-term growth due to their proprietary revolutionary technologies and crucial investments.
Our Methodology
To come up with the 10 best stocks to buy and hold for 5 years, we sifted through multiple similar rankings and compiled an initial list of 20 stocks. We then ranked the top 10 based on their hedge fund sentiment at the end of Q2 2024.
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).
A network of solar panels on the rooftop of a commercial building, creating electricity for places of business.
Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 92
Vistra Corp. (NYSE:VST) is an electricity generation company based in Texas, United States. The company has more than 5 million customers, 6,800 employees, and 41,000 megawatts of power generation capacity.
As of September 30, the company hedged nearly 100% of expected generation volumes for 2024, 95% for 2025, and 64% for 2026. During Q3 2024, Vistra Corp. (NYSE:VST) grew its fleet of zero-carbon resources by securing two power purchase agreements at new solar facilities, with a total capacity of 600 megawatts. The company also expanded its interest in nuclear energy by acquiring a 15% minority stake in its Vistra Vision subsidiary, making Vistra Corp. (NYSE:VST) the sole owner of its carbon-free assets. This acquisition increases Vistra Corp.’s nuclear ownership by 970 megawatts.
On the nuclear energy front, Vistra Corp. (NYSE:VST) announced that the Nuclear Regulatory Commission (NRC) approved the company’s request to extend its operating licenses for its Comanche Peak Nuclear Power Plant through 2050 and 2053, an added 20 years beyond the original licenses. Its Perry Nuclear Power Plant has an application for a 20-year license renewal through 2046 under process, with high expectations of it going through.
Overall, Vistra Corp. (NYSE:VST) is well-positioned to exploit the growing demand for nuclear energy from large tech companies for their AI data centers. The company already has agreements with two of the magnificent seven, positioning it as a leader in nuclear energy. Analysts are also bullish on the stock and their median price target of $145 implies an upside of 15% from current levels, as of November 7.
Fidelity Growth Strategies Fund stated the following regarding Vistra Corp. (NYSE:VST) in its Q2 2024 investor letter:
“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.”
Overall, VST ranks 7th on our list of best stocks to buy and hold for 5 years. While we acknowledge the potential of VST to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. 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.