Vistra and MasterCraft Boat Have Been Highlighted as Zacks Bull and Bear of the Day

Chicago, IL – July 1, 2024 – Zacks Equity Research shares Vistra VST as the Bull of the Day and MasterCraft Boat Holdings, Inc. MCFT as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Dominion Energy D, NextEra Energy NEE and FirstEnergy FE.

Here is a synopsis of all five stocks:

Bull of the Day:

Vistra stock skyrocketed 125% in the first half of 2024, lagging only Super Micro Computer and Nvidia as the top-performing S&P 500 company.

Vistra is thriving as Wall Street embraces the companies that will power the U.S. as the country attempts to transition away from fossil fuels at the same time as the artificial intelligence boom sends energy demand soaring.

Vistra is the largest competitive power generator in the country and it's gone all in on nuclear and other alternative energy sources poised to power the world in the coming decades. VST's earnings and revenue growth outlook is impressive and its most recent EPS estimates showcase even stronger bottom-line expansion.

On top of that, Vistra's recent pullback sets investors up to buy VST stock at a great entry point.

The Energy Transition Megatrend

AI grabbed the lion's share of the headlines so far this year. Yet three of the seven top-performing S&P 500 stocks in the first half of 2024 were new-age energy companies, including Vistra.

Wall Street giants like Goldman Sachs view the global energy transition as one of the most important pillars of the U.S. economy during the coming decades.

Alternative energy accounts for roughly 80% of global energy investment growth, and the International Energy Agency estimates that $2 trillion will be spent on clean energy technologies and infrastructure in 2024 alone, across wind, solar, energy storage, nuclear, the electricity grid, and beyond.

Nuclear is rapidly gaining steam as part of the non-fossil fuel energy push as wealthy nations, tech giants, venture capitalists, and beyond finally realize its reliability and nearly boundless potential must be unleased. Microsoft and other firms have partnered directly with nuclear energy companies to fuel their AI-focused data center expansion.

The U.S. co-led in December 2023 a coalition of over 20 countries from four continents that pledged to triple nuclear energy capacity by 2050. This effort is part of a huge push from the U.S. government to spur spending and investment across non-fossil fuel energy.

VST 101

Vistra is an integrated retail electricity and power generation company. VST's portfolio includes natural gas and coal, which remain vital, as well as nuclear, solar, and battery energy storage facilities.

VST closed its acquisition of Energy Harbor in March to boost its zero-carbon generation portfolio. Vistra added a 4,000-megawatt nuclear generation fleet and roughly 1 million additional retail customers. The Energy Harbor deal transformed Vistra into one of the foremost integrated zero-carbon generation and retail electricity companies.

Vistra owns four nuclear generation facilities, generating enough zero-carbon baseload electricity to power 3.2 million U.S. homes. Vistra owns the second-largest competitive nuclear fleet and boasts the second-largest energy storage capacity in the country. This includes one of the world's largest battery energy storage facilities. Vistra is also actively expanding its portfolio of solar assets.

Vistra said last quarter that the U.S. Inflation Reduction Act provides the opportunity to "realize material benefits with respect to its renewables and energy storage projects, as well as provide strong price support via the nuclear production tax credit for its nuclear facilities."

Vistra earlier this year started construction on two of its three larger Illinois combined solar and energy storage projects, as part of the state's Coal to Solar and Energy Storage Initiative.

Growth Outlook and EPS Revisions

The Irving, Texas-based firm currently serves approximately 5 million residential, commercial, and industrial retail customers across 20 states, including every major competitive wholesale market.

Vistra is projected to grow its revenue by 15% in 2024 and another 11% next year to reach $18.85 billion in fiscal 2025.

More importantly, Vistra is projected to grow its adjusted earnings by 10% this year and 36% next year, based on current Zacks estimates. The company's earnings revisions have surged over the past 12 months, with its FY24 consensus up 25% from where it was this time last year, while its FY25 estimate has climbed 34%.

Better still, Vistra's most accurate/recent EPS estimates came in way above consensus. VST's most accurate Zacks estimate for FY24 is 20% above the already greatly improved consensus at $4.74 a share vs. $3.95, with FY25's 17% higher. Vistra's surging earnings estimate revisions help it land a Zacks Rank #1 (Strong Buy).

Performance and Technical Levels

Vistra shares soared roughly 125% during the first six months of 2024, lagging only Super Micro Computer and Nvidia in the S&P 500. VST's performance also crushed fellow nuclear energy standout Constellation Energy's (CEG) 75%.

Vistra's market-crushing performance is part of a 275% run in the last two years and a 230% climb over the past 12 months, blowing away Nvidia's 205% and Constellation Energy's 125%.

Investors who missed this stretch can buy VST 20% below its late May peaks. VST is also trading 32% below its average Zacks price target. Vistra is attempting to hold its ground at its 50-day moving average while trading at its lowest RSI levels since the market bottomed in October.

Bottom Line

Vistra is poised to thrive as more of Wall Street grasps that VST and a few other key energy companies are set to benefit directly from soaring AI-based energy demand as the U.S. attempts to transition away from fossil fuels.

The momentum behind alternative, clean, and renewable energy is monumental and seemingly unstoppable. Vistra stock helps investors gain exposure to that key megatrend. Plus, Vistra pays a dividend and trades at a 35% discount to the Utilities sector and 37% below Constellation Energy with a PEG ratio of 1.06.

Bear of the Day:

MasterCraft Boat Holdings, Inc. shares have tumbled 37% in the last year, including a 16% YTD drop. MasterCraft Boat is suffering from slowing demand and other setbacks after a booming post-Covid stretch.

MCFT's earnings outlook has plummeted during the last 12 months, dropping meaningful lower following its Q3 FY24 release in early May.

MasterCraft Boat Basics

MasterCraft Boat is one of the powerhouses of the recreational boating world. The company is a leading designer, manufacturer, and marketer of recreational powerboats through its four brands: MasterCraft, Crest, Aviara, and Balise.

MasterCraft Boat holds a leading market share in performance sport boats and pontoon boats, two of the fastest-growing segments of the powerboat industry. MasterCraft Boat is also expanding in the large, growing luxury day boat segment.

MasterCraft Boat posted 28% revenue growth in its fiscal 2021 and 38% stronger sales in FY22. The company posted 3% sales expansion in FY23, as it came under pressure from those difficult to compete against periods.

MasterCraft Boat benefitted from the Covid-based spending spree. But anyone who wanted to buy a boat over the last few years seemingly already did. Consumers are now spending heavily on travel and experiences. On top of that, the macroeconomic landscape is far different.

MasterCraft Boat CEO Brad Nelson said last quarter that a "competitor's largest dealer is in financial distress, which has heightened competitive pressure with the potential for higher-than-normal competitor discounting. Dealer inventories remain higher-than-optimal and inventory carrying costs are elevated. Consequently, dealers are taking a cautious approach to ordering ahead of the annual model year changeover."

Bottom Line

MasterCraft Boat's recent setbacks are part of a long-term downtrend that's seen its consensus FY24 earnings estimate fall roughly 70% in the past 12 months, while its FY25 estimate is over 50% worse. MasterCraft Boat's overall downward earnings revisions help it land a Zacks Rank #5 (Strong Sell) right now.

MasterCraft Boat shares are down 8% over the past five years vs. the S&P 500's 90% climb. MCFT is not alone in its struggles, with the broader Zacks Consumer Discretionary sector down 20% during the last five years.

MasterCraft Boat trades below its 21-day, 50-day, and 200-day moving averages. MCFT also trades at a 62% premium to its three-year median at 11.X forward 12-month earnings. Now might not be the best time to think about buying MasterCraft Boat.

Additional content:

U.S. Utilities Prepare for Above-Average Hurricane Season

The Atlantic Hurricane season spans from Jun 1 to Nov 30 and brings severe storms, which impact the electric supply infrastructure of the utility companies. Nature's fury is unpredictable and to reduce the impact of severe weather conditions, utilities have invested millions of dollars in fortifying their infrastructure.

For 2024, the National Oceanic and Atmospheric Administration has predicted an 85% chance of an above-normal hurricane season, with 17-25 named storms and eight to 13 hurricanes, including four to seven major hurricanes. This year's forecast is around 30% more storm activity compared to the number of storms predicted last year.

Thanks to the improvement in weather forecasts and technology, utilities can locate areas in their service territories that are historically prone to severe weather conditions. Utilities have been working on a multi-year infrastructure strategy to strengthen the electric grid, making it resilient enough to withstand the challenges posed by severe weather conditions.

Electric utilities are burying outage-prone electric service lines, managing vegetation near power lines and installing smart equipment that can detect outages quickly and automatically take corrective actions. Utilities are also working to save essential equipment in flood-prone areas and strengthen the poles and wires that need to withstand the fury of nature.

Utilities upgrade and strengthen electric infrastructure work throughout the year to improve their quality of service and provide service even during difficult weather conditions.

Utilities Taking Initiatives

Measures taken by a few utilities to counter the hurricane season are mentioned below.

Dominion Energy has been investing steadily to upgrade its infrastructure. Dominion's unit Dominion Energy Virginia has completed burying 2,000 miles of overhead power lines, which is part of the company's Strategic Underground Program. The shifting of power lines underground will lower storm-related outages and reduce the time for restoration of power in outage-prone areas during the hurricane season.

NextEra Energy has a comprehensive and flexible storm response plan. NextEra Energy unit Florida Power & Light Company has invested in a stronger, smarter and more storm-resilient energy grid that benefits customers by improving the speed of restoration and reducing outage times following severe weather. The company has invested in a smart grid, buried power lines and replaced nearly all of its transmission structures with steel or concrete.

FirstEnergy is also regularly making investments to strengthen its transmission and distribution network. The company is also using helicopters to inspect the transmission lines. The purpose of the inspections is to search for equipment issues that are not apparent from the ground and faults that are not visible from the ground. FirstEnergy also uses thermovision cameras to take infrared pictures of electrical equipment, assisting in the identification of possible issues in power lines.

All these stocks currently carry a Zacks Rank #3 (Hold).

Price Performance

Each of the stocks mentioned above has performed better than the industry in the past six months.

Round Up

We require a 24X7 supply of electricity to smoothly continue our daily chores but the devastation caused by hurricanes can disrupt the power supply. Global warming has made these storms even more destructive. Yet, investors should note that utilities have been bracing their stocks against any upheaval that these storms might trigger.

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