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It is a watershed moment in the history of the U.S. nuclear industry. Constellation Energy plans to restart the Three Mile Island nuclear plant , with operations slated to resume in 2028 subject to approval by the Nuclear Regulatory Commission. Its stock has surged nearly 20% on the news. The deep pockets of Microsoft will breathe new life into the plant. The tech company signed a 20-year agreement to purchase clean power from the plant to offset emissions from its artificial intelligence data centers. The Three Mile Island restart is not just a milestone for Constellation. It demonstrates the growing financial opportunity that nuclear power represents for utilities and their investors. Only one power sector stock is hotter than Constellation right now. Vistra Corp. shares surged more than 14% after the Three Mile Island announcement Friday. VST YTD mountain Vistra shares, YTD The power company, headquartered outside Dallas, is viewed as one of the lead contenders to ink a data center nuclear deal next. Vistra leads the market Previously an obscure name, Vistra shares have soared more than 175% this year, blowing past the AI chip powerhouse Nvidia to lead the entire S & P 500 on its data center opportunity. Vistra completed the acquisition in March of two nuclear plants in Ohio and one in Pennsylvania through its $3.4 billion purchase of Energy Harbor . The broader utilities sector has gained about 25% this year, in large part due to the data center demand trend. Investors can play this trend through buying independent power producers like Vistra, rather than regulated utilities, because they dispatch power based on economics, according to Shahriar Pourreza, senior managing director of North American power and utilities at Guggenheim Securities. Jefferies initiated coverage of Vistra earlier this month with a buy rating, choosing the company as its best-in-class stock in the power sector. Wall Street analysts have an average stock price target of $116.89 per share, implying 26% upside from Thursday’s close of $92.52, according to FactSet data. VST NVDA YTD line Vistra vs. Nvidia “Vistra’s years of acquisitions, rationalizations, and lessons learned about risk have positioned the company well for the power markets of today,” Jefferies analysts led by Julien Dumoulin-Smith told clients in a note earlier this month. “Vistra’s timely acquisition of nuclear portfolio Energy Harbor in 2023 gives the company a coveted nuclear portfolio,” the analysts said. Vistra CEO Jim Burke told investors that the company is having numerous conversations with customers about directly powering data centers with its plants and is “in due diligence for a number of sites.” Burke specifically called out Comanche Peak, a twin reactor nuclear plant with 2.4 gigawatts of capacity outside Forth Worth, Texas. “We’re seeing some interest in Comanche Peak,” Burke told analysts on the company’s second-quarter earnings call in August. Other power companies poised to benefit from the growing nuclear demand from data centers include NextEra Energy and Dominion Energy . NextEra CEO John Ketchum told investors in July that the company is considering restarting the Duane Arnold nuclear plant in Iowa “There would be opportunities and a lot of demand from the market if we were able to do something with Duane Arnold,” Ketchum said on NextEra’s second-quarter earnings call. NextEra was up just 1.4% on Friday, but has gained 37% so far this year. The power company has the equivalent of a buy rating from 62% of Wall Street analysts, though its stock has largely caught up with the Street’s average price target of $83.94 per share, according to FactSet. Dominion Energy CEO Robert Blue told investors that the utility would consider locating a data center next to the Millstone nuclear plant in Waterford, Connecticut. Dominion has gained more than 22% this year, though nearly 80% of Wall Street analysts have put a hold on its stock for now.
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https://www.cnbc.com/2024/09/20/this-power-company-has-outpaced-nvidia-could-ink-next-nuclear-deal-after-three-mile-island.html
