You can’t talk about the AI revolution without discussing the ever-increasing demand for power it has created. In particular, nuclear power has been refocused. There is a two-part reason why now is a good time to buy stock in a power generation company See (NYSE: VST)and it has to do with two tech giants.
Last week, Vistra announced this Meta Platforms (NASDAQ: META) had entered into a 20-year power purchase agreement involving three nuclear plants owned by Vistra. This is not just lip service from Meta leader Mark Zuckerberg; this is a real investment that will have a positive effect for energy investors.
More than a year ago, Nvidia (NASDAQ: NVDA) CEO Jensen Huang made comments about how nuclear is necessary and “a fantastic way forward.” The demand for energy is so great that Huang also discussed how all forms of energy will be needed. This is even better news for Vistra investors, as the company owns and operates nuclear, natural gas, coal and solar generation facilities as well as battery energy storage facilities.
Vistra’s ability to rise to the occasion through dispatchable generation — which can scale up and down quickly to meet real-time needs — means the company is well-suited to the needs of data centers. Demand for electricity is heating up fast. It is expected that 12% of US electricity consumption will be from data centers by 2028. That’s a threefold increase from 2023 alone.
Vistra stock trades at a forward price-to-earnings ratio (P/E) of just under 18 and an enterprise value-to-EBITDA ratio of 15. Not only do I believe Vistra is fairly priced now, but I would anticipate strong growth from Vistra over the next few years. The company revised upward guidance in its earnings report in early November. As a bonus, Vistra has also rewarded shareholders with quarterly dividends since 2019, although it now yields below 1%. For investors who want to find a way to get in on the energy wave through a proven entity, Vistra is worth a look.
Before you buy stock in Vistra, consider this:
the Motley Fool Stock Advisor a team of analysts has identified only what they believe they are 10 best stocks for investors to buy now… and Vistra was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.