Which data center stock is the best to buy, according to Jim Cramer?

Which data center stock is the best to buy, according to Jim Cramer?

We recently published a list of Jim Cramer’s Latest Portfolio: Top 10 Stocks in July. With Vistra Corp (NYSE:VST) ranking at #7 on the list, the company deserves a closer look.

Jim Cramer said on a new episode of CNBC’s “Mad Money” that while investing isn’t easy, it’s made harder by “authentic Wall Street bullshit” and “arcane technology.” Cramer said there’s a “whole industry” on Wall Street that wants people to think investing is hard and that “regular people” can’t do it on their own. Cramer said many people in the financial industry are just “out to get your money’s worth” and aren’t interested in making money with original investments. Cramer said hedge fund managers and mutual funds make investing seem inaccessible and impenetrable.

Cramer said he was “pulling back the curtain” and stressed that investing is not “rocket science” or “brain surgery” and that you don’t have to go to business school to understand it. Cramer presented himself as a “coach” or a “translator” who can explain the meaning of complex financial terms to ordinary people.

“You can understand all the mystical-sounding vocabulary we throw around here as long as you have a translator, a coach like me, who can explain what those damn words mean.”

For this article, we watched several recent Jim Cramer shows on CNBC and picked out 10 stocks that he talked about. For each company, we listed the number of hedge fund investors. Why are we interested in the stocks that hedge funds are investing in? The reason is simple: Our research has shown that we can beat the market by imitating the best stock picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points. (see more details here).

Jim Cramer's Latest Portfolio: Is Vistra Corp (NYSE:VST) the Best Stock in July?Jim Cramer's Latest Portfolio: Is Vistra Corp (NYSE:VST) the Best Stock in July?

Jim Cramer’s Latest Portfolio: Is Vistra Corp (NYSE:VST) the Best Stock in July?

Vistra Corp (NYSE:VST)

Number of hedge fund investors: 79

Jim Cramer spoke again about Vistra Corp (NYSE:VST) on a recent program, saying the company is benefiting from rising electricity demand “thanks to energy-hungry data centers.”

“Vistra is a little bit special because they recently acquired three nuclear power plants in addition to the ones they already had. And right now nuclear is in demand because it’s the only way to get reliable, clean energy on a large scale.”

Vistra Corp (NYSE:VST) is a power generation company that is also involved in electricity generation and wholesale energy purchases and sales. Vistra Corp (NYSE:VST) has approximately 5 million customers and operates a portfolio of 41,000 megawatts of natural gas, coal, nuclear and solar assets, as well as battery storage facilities.

Citi recently released a list of utility stocks it’s bullish on, given the importance of electric grids, growth in renewable energy and AI-driven demand. Vistra Corp (NYSE:VST) is one of the stocks Citi likes.

Guggenheim analyst Shahriar Pourreza, who has a buy rating and a Street-high price target of $133 on Vistra Corp (NYSE:VST), thinks VST is a “unicorn” for its portfolio of both gas-fired and nuclear power plants. Pourreza further said in his note to clients that data centers are looking for 24-hour energy sources that are clean and “nuclear is a very strong avenue for that,” further bolstering his thesis for the stock.

Meridian Hedged Equity Fund stated the following regarding Vistra Corp. (NYSE:VST) in its first quarter 2024 investor letter:

Vistra Corp. (NYSE:VST) is an integrated retail electric and power generation company based in Irving, Texas, with operations in 12 states and six of the seven competitive markets in the U.S. Vistra’s retail brands serve approximately 2.9 million customers and its power plant fleet totals approximately 41,000 megawatts of natural gas, nuclear, coal and solar facilities. Vistra was a top performer in the strategy last quarter, with shares up more than 80%. A key driver is the thesis that the expected growth of energy-hungry data centers, fueled by the rise of generative AI, will increase electricity demand and prices, which is expected to significantly benefit incumbent electric generators like Vistra. The company’s efficient generation portfolio, particularly its nuclear and natural gas plants, is well positioned to benefit from rising demand, scarcity prices and additional services in the Texas electricity market. Vistra is also exploring opportunities to potentially sign high-margin power purchase agreements directly with data center customers for its nuclear plants, similar to a recent deal between peer Talen Energy and Amazon. We continue to like Vistra’s strong free cash flow generation, which supports continued share buybacks and deleveraging, synergies from the recent Energy Harbor acquisition, and a favorable electricity market backdrop with rising spark spreads. We have shorted the stock following the strong performance in the period.”

Overall, Vistra Corp (NYSE:VST) ranks 7th on Insider Monkey’s list with the title Jim Cramer’s Latest Portfolio: Top 10 Stocks in July. While we recognize the potential of Vistra Corp (NYSE:VST), our conviction is based on the belief that AI stocks offer a greater chance of delivering higher returns, and in a shorter time frame. If you’re looking for an AI stock that shows more promise than Vistra Corp (NYSE:VST), but trades at less than 5x earnings, check out our report on the cheapest AI stocks.

READ ALSO: Analyst Sees New $25 Billion ‘Opportunity’ for NVIDIA And Jim Cramer recommends these stocks.

Disclosure: None. This article was originally published on Insider Monkey.