VST daily
The best business to own this year was old-fashioned power generation.
It’s poetic how an industry that was seen as the epitome of quiet and predictable has just passed the AI-revolutionary defining company as the best performer in the S&P 500 this year.
That’s what Vistra did as it’s now gained 252% year-to-date.
Vistra is a $40 billion energy company that generates and sells electricity. In simple terms, they operate power plants that produce electricity using various energy sources like natural gas, coal, nuclear, and renewables such as solar and wind.
The latest leg up is based on nuclear after Microsoft’s deal with Constellation to reopen Three Mile Island implied nuclear baseload value at around double today’s going rate. Vistra owns the Comanche Peak nuclear plant in Texas, which is about 8% of its portfolio.
As I have been writing for awhile, there is a big shortage of electricity coming. The market is waking up to scarcity pricing of electricity and the massive NIMBY problems of building generation and transmission for the electrified, generative AI economy.
There are huge knock ons in this space around generation, transmission and materials including:
- Natural gas
- Renewables
- Coal
- Transformers and turbines
- Copper
- Transmission
- Grids
The scale of this problem and build-out is hard to overstate.
The great news for investors is that some of the world’s sleepiest companies — utilities — are still cheap, offering great yields and will also benefit from falling interest rates.