We recently compiled a list of the Jim Cramer’s ‘Ignore the Chatter’ Guide: 10 Stocks to Buy Today. In this article, we are going to take a look at where Vistra Corp. (NYSE:VST) stands against the other Jim Cramer-approved stocks.
On his Friday show, Jim Cramer discussed the “tyranny of larger macro forces,” lamenting how the market has become overly fixated on broad economic indicators like interest rates and the Fed’s actions instead of keeping their eyes on the prize—great stocks with great stories.
The “short-term guessing game based on the data point of the day” can blindside investors to the long-term glory of what is in front of them, according to Cramer, who also expressed his disdain for ETFs by stating:
“..there could be a pickup in semiconductors if the economy accelerates so we buy an ETF that has semis rather than just going after Nvidia for AI or Texas Instruments for the Internet of Things.”
The backdrop to these comments was the U.S. stock market experiencing a significant rally following the release of encouraging jobless claims data. The S&P 500 jumped by 2.3%, reflecting widespread gains across multiple sectors. The Dow Jones Industrial Average surged by 683 points, highlighting strong performance among blue-chip stocks, while the NASDAQ Composite climbed 2.87%, driven by a rebound in technology and growth stocks.
This rebound helped the S&P 500 recover nearly all losses from earlier in the week, when recession fears and the unwinding of a global yen-funded carry trade led to a sharp decline.
Analyzing Jim Cramer’s recent “Mad Money” episodes, we made a list of 10 stocks that the veteran CNBC host is bullish on. These are companies that are well-poised for long-term growth, given that investors are able to hold their ground and “ignore the chatter.”
The reason we track what hedge funds are doing and their favorite stocks 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)
Number of Hedge Fund Investors: 79
Jim Cramer is telling callers to his CNBC show to “definitely” hold on to Vistra Corp. (NYSE:VST) stock, which makes sense given that it has risen 106.57% in the year to date as of August 9.
Vistra Corp. (NYSE:VST) is based in Texas and acts as one of the largest integrated power producers in the country. At the end of May, Morgan Stanley reiterated its “Buy” rating for Vistra Corp. (NYSE:VST) with a price target of $110, up from $86. Analysts believe the firm’s focus on renewable energy and its robust cash flow generation are key factors supporting shareholder value and long-term growth.
Legacy Ridge Capital had this to say about Vistra Corp. (NYSE:VST) in its Q2 2024 investor letter:
“One of the sectors we know well which had been out of favor for several years has quickly come into favor: Independent Power Producers (IPPs). We’ve written consistently about NRG and Vistra Corp. (NYSE:VST) since the 2019 letter, have owned each, or both, since 2018, and invested a meaningful amount of our assets in VST specifically the past few years. Nate and I intend on spending more time in the year-end letter on our updated views on the IPPs and our learnings from the on-going investment, but we were a bit surprised how quickly the narrative around these companies changed. Our Blue Sky 2030 estimates of intrinsic value converged with the share price 6-years before we thought probable. In the 2019 letter, with respect to VST, we wrote:
“Over the next decade management should have close to $15 Billion to deploy to share repurchases. If you assume they have to pay an average price for the stock that’s higher than the current one, and they can only repurchase 60% of shares outstanding instead of the 100% the math implies, FCF per share in 2030 would be $14. That’s a $70 stock at today’s valuation, but a $140 stock at a more reasonable FCF yield of 10%.” And… “The IPPs are un-investable for most money managers, so there we are. When they become investable we’ll probably be long gone.”
Overall VST ranks 4th on our list of the best stocks to buy according to Jim Cramer. 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 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.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article was originally published at Insider Monkey.
