We recently published a list of the 13 Best Energy Stocks to Buy Right Now. In this article, we are going to take a look at where Talen Energy Corporation (NASDAQ:TLN) stands against other best energy stocks.
The worldwide energy industry has recently been rattled by a combination of factors, including the trade war sparked by President Trump’s tariffs, the prospects of a global economic slowdown, and the sharp slump in crude oil prices. As a result, at the time of writing this piece, the overall energy sector has fallen by 4.64% since the beginning of 2025, compared to declines of almost 3.6% by the wider market.
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The steep downturn in global crude prices has particularly hit hard, and there appear to be no signs of a reversal as of yet, since the supply is projected to increase while demand forecasts keep falling. The West Texas Intermediate (WTI) oil price fell to just over $57 a barrel earlier this week, a level it last hit during the peak of the COVID-19 pandemic in 2021. However, it has slightly recovered since then and is currently hovering just around the $61 mark, buoyed by hopes of a breakthrough in looming trade talks between the US and China. Still, the low prices and higher costs due to tariffs on steel and aluminum have pushed many American oil producers to put the brakes on drilling new wells.
However, the same cannot be said about natural gas and its liquified state, LNG, which has especially fared well under the Trump administration. On his very first day in office, the President ordered the resumption of LNG export approvals and has started rolling back environmental regulations that slowed projects. The United States is already the largest LNG exporter in the world, with a record 11.9 billion cubic feet per day of outflows in 2024. These numbers are now expected to receive a significant boost, as the US Energy Information Administration has forecasted the country’s LNG exports to 15.2 bcfd this year. Europe remains the top destination for American LNG, accounting for over 75% of total orders this year. The continent has had to rely significantly more on imported LNG and less on gas delivered via pipelines from Russia since the Putin government’s invasion of Ukraine in 2022.
The ongoing AI boom is also expected to be a significant growth factor for the natural gas industry, which has emerged as the leading contender to power its data centers. These energy-intensive facilities could consume as much as 9% of all energy generated in the US by 2030, and this energy needs to come from a relatively clean, flexible, and reliable source that is abundantly available in the form of natural gas. According to data from S&P Global Commodity Insights, if even a quarter of the projected data center load is supplied by gas-fired generation, this would translate to a 2% increase in total US gas demand in 2040.
The price of natural gas has more than doubled since March 2024, offering a significant lifeline for America’s oil and gas sector in the last quarter, especially with the plunging crude prices denting their profits.
A close-up of an electrical power line with a bright blue sky in the background, highlighting the company’s selection of electricity and natural gas services.
Methodology:
To collect data for this article, we scanned Insider Monkey’s database of hedge funds’ stock holdings and picked the top 13 companies operating in the energy sector with the highest number of hedge fund investors in Q4 of 2024. The following are the Best Energy Stocks According to Hedge Funds.
At Insider Monkey, we are obsessed with 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).
Talen Energy Corporation (NASDAQ:TLN)
No. of Hedge Fund Holders: 77
Ranked at number 11 on our list of the Best Energy Stocks is Talen Energy Corporation (NASDAQ:TLN), a leading independent power producer and energy infrastructure company with 10.7 GW of generation assets.
Talen Energy Corporation (NASDAQ:TLN) had a strong Q4 2024 as its EPS of $0.47 was significantly above market expectations by $0.67. The company’s revenue of $467 million, though down 11.39% YoY, also managed to beat estimates by $33.1 million. TLN reported a net income attributable to stockholders of $998 million for the full year 2024, up about 63% from 2023. The power company also boasts a robust balance sheet, generating an adjusted free cash flow of $283 million in FY 2024 and ending the year with approximately $1.2 billion of liquidity, including over $470 million in cash.
Talen Energy Corporation (NASDAQ:TLN) made headlines last year after it sold its hyperscale data center campus in Pennsylvania to Amazon Web Services Inc. for $650 million. The 960 MW campus was meant to be powered by Talen’s Susquehanna Nuclear Power Plant. However, not all has gone as planned after the Federal Energy Regulatory Commission (FERC) voiced concerns about how the campus might affect power reliability and costs for the general public. FERC rejected Talen’s request to increase power supplied to the data center beyond 300 MW and has since denied any requests to reconsider.
River Road Asset Management stated the following regarding Talen Energy Corporation (NASDAQ:TLN) in its Q4 2024 investor letter:
“Another top contributor was Talen Energy Corporation (NASDAQ:TLN), a leading independent power producer. TLN boasts a diverse 10.7 GW generation portfolio spanning nuclear (48%), natural gas (41%), and coal (11%) assets across the PJM (northeastern states) and WECC (western regions). The electrical grid faces mounting pressure from rapidly escalating demand, fueled by transformative technologies like artificial intelligence (AI). Consequently, the price of clean and reliable nuclear power is expected to increase significantly. TLN’s crown jewel, the Susquehanna nuclear facility, enjoys dual advantages: a tax credit safeguarding its cash flow downside and upside cash flow potential as power prices respond to new agreements. These benefits are exemplified by TLN’s recent contract with Amazon® and Constellation Energy Group’s (CEG) plans to reactivate Three Mile Island to meet Microsoft’s® demand.
This strategic positioning drove several powerful catalysts in the quarter despite the Federal Energy Regulatory Commission’s (FERC’s) rejection of the ISA amendment for increased Amazon Web Services (AWS) power capacity. The company demonstrated strong shareholder commitment by executing an additional $1B buyback, bringing total repurchases to 20% of shares in 2024, with $1.0B still authorized through 2026. The stock benefited from substantial passive fund demand, with over six million shares acquired in September alone following inclusion in five equity indices. Most importantly, the underlying business fundamentals remained robust, with expanded spark spreads driving increased generation margins across the fleet, while maintaining a conservative leverage ratio of 2.4x, well below the 3.5x target. The market particularly responded to the growing narrative around data center power demand, which is expected to surge from 25 gigawatts in 2024 to more than 80 gigawatts by 2030, positioning Talen’s existing generation capacity as increasingly valuable in a market facing significant supply constraints. We trimmed the position as it approached its assessed value.”
Overall, TLN ranks 11th on our list of the best energy stocks to buy right now. While we acknowledge the potential of TLN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than TLN but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.