Jim Cramer - Mad Money Vistra VST-N DON'T BUY Jun 14, 2024

Is up 80% in the past month, the best S&P performer and hitting a new high today. Healthy profits and unique assets with secular growth from nuclear energy demand, which needs to fuel AI production. But Vistra is no longer cheap at 24x forward PE, so he expects it to consolidate.

Profitable and never expensive. A top pick in nuclear power. Also likes Constellation Energy.

Shares have rallied 200%. Take some profits.

Of its energy sources, 60% is natural gas and 20% coal, but they have nuclear exposure and are making investments in renewables.

His biggest winner of the year, up 264%. He has not trimmed his holding. It still isn't expensive at 20x forward PE. Demand for energy to fuel AI will endure.

VST tanked over 28% today on news of China's DeepSeek stealing the AI crown from ChatGPT--DeepSeek is faster and cheaper. All AI-related stocks, including energy plummeted as the Nasdaq slid over 3%. It's a confusing situation that happened so suddenly that you have to sit on your hands and wait.

Is awaiting clarity about DeepSeek's actual costs and the entire AI complex. Rallied on the data centre trade, until DeepSeek hit.

Pullback is excellent entry. Second-derivative trade on AI revolution. Leading independent power producer in US, ~5M customers across 20 states. Half its business is in Texas, which is ground zero for power-hungry data centres. Yield is 0.7%.

Likely to sign an agreement with a hyperscaler. Power prices increasing. Can foresee upgrade to credit rating, which lowers cost of capital. Trades at a fairly undemanding 10-10.5x enterprise value to EBITDA.

Outperformed peers, much of it due to acquisitions as well as to the AI and data centre buildout. That appetite for energy is only going to grow. Despite some concerns that we won't actually need all this power, this name should see fantastic cashflow generation going forward. So many acquisitions does bring the challenge of integrating them all.