We recently published a list of 10 Best Upside Stocks To Buy Right Now. In this article, we are going to take a look at where Vistra Corp. (NYSE:VST) stands against other best upside stocks to buy right now.
On March 8, Bob Elliott, Co-Founder, CEO, and CIO of Unlimited, and Kara Murphy, CIO of Kestra Investment Management, joined ‘Closing Bell Overtime’ on CNBC to talk about the week’s market action. In a discussion on whether stocks or gold were the better choice in the current economic climate, Bob Elliott noted that stocks were facing tough circumstances due to elevated expectations at the start of the year, which had begun to adjust downward. He highlighted concerns about fiscal tightening, tariff volatility, and weaker employment conditions. However, he emphasized that these factors were overshadowed by potential tax policy changes, immigration restrictions, and efforts to curb federal spending, which could impact nominal GDP growth. Kara Murphy was asked about diversification, which is a topic that gained traction after a prolonged period where mega-caps and tech stocks dominated returns. She pointed out that diversification had been undervalued for two years but was now proving its worth as bonds and international funds outperformed US stocks. Murphy suggested that a diversified portfolio was essential for navigating the market, as it was no longer reliant on just a few high-performing stocks.
The conversation then turned to the push-and-pull between monetary and fiscal policies. Elliott discussed the volatility caused by rapid changes in policy, such as tariffs, which made it difficult for investors to have high conviction in any direction. This volatility was forcing professional money managers to reduce risk, which led to a decrease in long positions in leveraged investments and a reduction in short interest positions. Elliott highlighted the challenge of finding incremental buyers for risk assets in such an uncertain environment. Murphy reflected on the market’s valuation at the start of the year, and noted that while valuations were high, they alone were not a reliable timing indicator for market corrections. She emphasized that earnings momentum would be crucial in the second half of the year, with a potential shift in relative strength from the MAG7 stocks to other parts of the market. Murphy cautioned that high expectations meant companies needed to continue meeting those expectations to sustain market performance.
As the discussion underscored the complexities and uncertainties of the current market environment, it emphasized the importance of diversification in investment strategies.
Methodology
We first sifted through stock screeners, online rankings, and internet lists to compile a list of the best stocks with analysts’ upside potentials over 50%, as of March 10. We then selected the 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Solar panel workers installing a new farm for clean energy generation.
Vistra Corp. (NYSE:VST)
Upside Potential as of March 10: 67.95%
Number of Hedge Fund Holders: 120
Vistra Corp. (NYSE:VST) is an integrated retail electricity and power generation company in the US. With a portfolio of generation assets which include natural gas, nuclear, and renewables, it provides reliable energy solutions. It also engages in wholesale energy trading and risk management.
The company is expanding to meet rising power demands, driven partly by AI data centers. It’s augmenting gas assets in Texas by 500 MW, converting a coal plant to gas (2027), and extending another plant’s operation (2027). Solar and battery projects, which include those for Amazon and Microsoft, will add over 600 MW. The company is also developing 860 MW of gas peaker plants (targeted for 2028).
The company is addressing growing load demands by advocating for market mechanisms that incentivize new generation. It’s encouraging to build new power plants to meet increasing electricity usage. It is highlighting the need for reliable dispatchable resources. It’s also exploring a potential 10% upgrade to its nuclear fleet. On March 5, Daiwa initiated coverage of Vistra Corp. (NYSE:VST) with a Neutral rating and a $120 price target. Daiwa believes that this company is a great AI story.
Meridian Hedged Equity Fund is positive on the company because of tightening power markets, strategic acquisitions, and strong financial performance. It stated the following in its Q3 2024 investor letter:
“Vistra Corp. (NYSE:VST) is an integrated retail electricity and power generation company, primarily serving Texas and the Midwest. We own Vistra because we expect power markets to continue tightening as baseload supply declines, coupled with rising demand from data centers, electric vehicles, and manufacturing reshoring. These factors create a favorable pricing environment for Vistra’s generation fleet, especially its nuclear and gas assets. The stock performed well during the period for three key reasons: tightening energy markets and strengthened pricing in forward-year energy contracts, the continuation of Vistra’s aggressive share repurchase program, and the company’s announced plan to acquire the remaining interest in Vistra Vision at an attractive valuation. Additionally, the company reaffirmed its 2024 guidance, indicating that results are trending toward the upper end of the previously projected range. We took advantage of the stock’s strength this quarter to trim our position.”
Overall, VST ranks 2nd on our list of best upside stocks to buy right now. While we acknowledge the growth 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.
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