Vistra Corp. (NYSE:VST), a Texas retail electricity and power-generation company, has become 2024’s best-performing stock, surpassing the tech giant Nvidia Corp. (NASDAQ: NVDA).
Vistra shares have soared 200% in the past two weeks. This is more than Nvidia, which has gained 150%. Wall Street analysts are taking notice.
Experts believe that despite its impressive run, Vistra still has a substantial upside potential. This is driven by favorable industry dynamics and strategic acquisitions as well as the increasing demand for electricity from AI-powered data centres.
Analysts predict Vistra Corp to continue its growth
Vistra’s price target was raised by Jefferies analysts to $137. This suggests that the stock could increase another 20%.
Steve Fleishman, of Wolfe Research, shares this optimistic outlook. He says that the market is yet to fully understand the company’s potential for growth.
Vistra’s exposure in power purchase agreements similar to Constellation Energy’s deal with Microsoft is a significant driver of potential.
Microsoft has agreed to purchase power from Constellation for roughly double the current market rate of $55 per Megawatt-hour.
Fleishman believes if Vistra can secure similarly agreements for its nuclear assets, the stock price could rise further.
Vistra is well positioned to take advantage of this growth. Statista predicts that the nuclear energy market will grow at an annualized 1.57 percent through 2029.
Dividend yield of 0.74% makes the company even more attractive to investors.
Vistra’s prospects are boosted by AI-driven demand
Vistra also benefits from the increasing demand for electricity due to the rise of artificial Intelligence (AI).
The development of AI technologies such as generative AI will likely lead to a significant increase in electricity consumption. Industry watchers have not been oblivious to this trend.
In its Q2 investor’s letter, the Meridian Hedged Equity Fund highlighted Vistra as one of the key beneficiaries of the expanding data centers industry and the higher electricity demand that results.
Meridian sees Vistra as having strong long-term prospects, citing its better-than expected guidance and plans to aggressively repurchase stock through 2025.
Vistra’s recent acquisitions further demonstrate its growth ambitions.
Last week, the company paid $3.25 billion to buy the remaining stake of its subsidiary VistraVision, thereby strengthening its position in the retail and power generation sectors.
The acquisition, as well as the company’s strong growth in revenue–Vistra reported an increase of 21% in revenue year-over-year to $3.85 Billion in Q2–signals their commitment to expansion and profitability on a long-term basis.
Lower interest rates provide financial tailwinds
Vistra’s stock is attractive after the Federal Reserve recently cut rates by 50 basis points.
As interest rates continue to drop, the company’s debt service costs will also decrease.
Vistra’s profitability and cash flow will improve as a result of the reduction in borrowing costs.
Vistra Corp. is well positioned to continue its success with a strong growth trajectory and strategic acquisitions.
Vistra stock is a great investment as AI continues to drive electricity demand, and nuclear power gains momentum.
Vistra’s impressive performance in 2024, driven by AI and strategic growth initiatives has propelled the company to the top of stock market.
Analysts are still bullish about its prospects. They cite potential power purchase agreements, mergers and acquisitions, as well as lower interest rates, as catalysts for future gains.
Vistra Corp is a great investment for investors who want to take advantage of the growth in the energy sector and the AI revolution.
This post Vistra Corp surpasses Nvidia to become the top-performing stock in 2024, analysts expect further upside may be modified based on new developments.
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